Close Close
Sign In
Newsletters
Popular Financial Topics Discover relevant content from across the suite of ALM legal publications From the Industry More content from ThinkAdvisor and select sponsors Investment Advisor Issue Gallery Read digital editions of Investment Advisor Magazine Tax Facts Get clear, current, and reliable answers to pressing tax questions
Luminaries Awards
Podcast Center Video Center Webcasts Resource Center Events
About ThinkAdvisor Contact Us Advertise With Us Asset & Logo Licensing Sitemap Terms of Service Privacy Policy Copyright © 2024 ALM Global, LLC. All Rights Reserved.
ThinkAdvisor

Life Health > Annuities > Fixed Annuities

The top 5 fixed annuity benefits to discuss with clients

By Rich Lane

X
Your article was successfully shared with the contacts you provided.

When it comes to making financial preparations for the future, there is nothing clients love more than a sure thing. The opportunity to make investments with a guaranteed minimum rate of return is just one of the reasons why fixed annuities are gaining in popularity, especially among post-recession investors.

In a recent post, I outlined the Top 5 reasons to buy a fixed annuity for financially conservative investors, but there are many reasons for your clients, young and old, to consider this investment option. Here are five additional benefits to help you position fixed annuity sales during your conversations with clients.

handshake

Fixed deferred annuities can have multiple guarantees

Fixed deferred annuities guarantee a minimum return for your client’s investment. For a conservative-minded investor, it doesn’t get any better than that. Additional guarantees, including interest rates for specific periods of time, are prevalent in the annuity marketplace today.

Your clients can choose a guarantee period as short as one year and as long as 10. Though not as plentiful in the marketplace, an annuity’s principal also can be guaranteed during the surrender charge period.

sales

No sales charges

With fixed annuities, your client’s entire premium gets put to work on their behalf. No sales charges are assessed — ever.

income

Fixed immediate annuities for a guaranteed income stream

For those looking for a guaranteed stream of income, a fixed immediate annuity should be a perfect fit. Fixed immediate annuities are offered in a breadth of options, allowing clients to structure payouts according to their financial goals and objectives.

Clients often worry that they will outlive their savings, but these four income streams can help ensure that isn’t the case:

  • Joint life: This option provides income for two people, as long as either client is alive. When one client passes away, payments continue to the survivor.

  • Period certain only: This allows the client to target how long they need an income stream. If the client passes away before the end of the certain period, remaining payments continue to the designated beneficiary.  

  • Life with a period certain: In this scenario, the annuity sponsor will pay out income for a client’s lifetime. If the client were to pass away prior to the end of the certain period elected, the beneficiary receives the remaining payments.

  • Life only: This is the least-commonly selected payout. When your client passes away, payments cease — no matter what. This can be risky, but the upside is this option provides the highest payouts.

saless

Accumulation

No matter what happens with the market, fixed annuities won’t dip below a certain percentage point of interest. This means that purchasers will continue to earn income, even in a down year. On the flip side, deferred index annuities can capture growth during good years. Annuities offer a long-term savings plan for a future income stream.

time to diversify

Diversification

Fixed deferred annuities can provide a predictable future with flexible payout options that offer a guaranteed income stream with earnings that aren’t taxed until the funds are used. Clients interested in using a fixed annuity as a tool to secure income for retirement can “turn on” a deferred indexed annuity before or after retirement to create a liquid stream of income.  

NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.