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Category: Sales · 6 min read

How to Sell an Annuity Without an Illustration

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on November 6, 2018

author profile photo

on November 6, 2018

Business man with his arms crossed, looking confident

Do you use annuity illustrations when you’re working with a client?

Illustrations can be a great tool to help sell an annuity and close the deal, but sometimes they’re not an accurate reflection of what your client will actually get in returns. Why? They highlight the best-case scenario for the client on what could happen, but it’s not a guarantee. It shows the potential lifetime payment, and some clients may believe that’s what they’ll be getting.

While illustrations are an engaging, visual tool that can help your clients understand the overall benefits of an annuity, you can also sell an annuity without using an illustration. Here are six tips to help you do just that.

Illustrations can be a great tool to help sell an annuity and close the deal, but sometimes they’re not an accurate reflection of what your client will actually get in returns.

1. Take a Holistic Approach

Think of a client’s retirement strategy like drone footage of a city’s downtown area. From the drone’s view you can see the whole campus, but when you’re on the ground, you have a limited view. When you sell an annuity, your client is probably seeing a limited view of their retirement strategy.

Instead, remind them of the bigger, holistic, drone-footage view, and that an annuity is one, key piece of the larger plan. It’s an essential part of their retirement, yes, but it’s part of a bigger story. Reiterating this can ease the client’s mind, and make an annuity seem more manageable.


2. Inform the Buyer

You know the benefits an annuity offers and how it all works, but odds are your clients don’t. So, change that. Help them understand how an annuity works, what the benefits are, why people buy an annuity, and how it fits into their overall retirement strategies. Share your knowledge with them, and explain clearly why you think an annuity is a good choice for their retirement strategy. Your clients will appreciate your wisdom and honesty, and may be more likely to purchase an annuity because they’re armed with accurate information.


3. Focus on the Guarantees

Illustrations don’t show any guarantees, but the guaranteed lifetime income and zero loss benefits do. Zero is your hero here. Make sure you communicate that annuities don’t suffer any losses if stocks go down, and they’ll be protected from any market losses. In addition to that, explain the guaranteed lifetime income benefits and the monthly income checks they’ll receive. This kind of assurance can help the sales process, and get your clients thinking about the benefits and accurate promises that an annuity provides.


4. Explain the Gains

Another benefit to mention and explain to your clients that are considering an annuity are the gains. How are gains made? How are they locked in? How will they know if they get a gain? Inform them of their index options, like the Standard & Poor’s stock index, and how it impacts their annuity. These are all important things for your clients to know so they can make an informed decision and consider all of their options.


5. Highlight the Tax Benefits

Tax benefits aren’t shown in illustrations, but they’re an important benefit to annuities. Here are the three major ones:

  1. No contribution limits. While other retirement accounts have annual contribution limits (like 401(k)s and IRAs), annuities don’t. This means your clients can put away as much money as they want to their retirement, if the annuity is set up as a non-qualified retirement account.
  2. Tax-deferred growth. Money that your clients put in an annuity grows tax-deferred, so they don’t have to worry about tax bills as their money compounds year after year.
  3. Only earnings are taxed. When your client withdraws the money in the annuity, the original contribution amount isn’t taxed, just the earnings.

Make these three tax benefits known to your clients and you can help paint an accurate picture of what their retirement can look like with an annuity.


6. Be Honest About Fees

By nature, most of us are skeptical. And for good reason. When we hear of a deal that seems too good to be true, one of our first thoughts usually is “what’s the catch?” When it comes to selling an annuity with an illustration, sometimes it can seem too good to be true. Some illustrations can obscure fees and make it seem better than it really is.

Don’t hide the fees, even if you’re afraid it will make your client change his or her mind. Be honest about all of the costs, and make sure your client is aware of everything that he or she might have to pay for. Being truthful builds credibility, and your clients will thank you for it.

Don’t hide the fees, even if you’re afraid it will make your client change his or her mind.

A Smoother Way

Illustrations can be a helpful tool in the annuity sales process, but it’s entirely possible to sell an annuity without one. Instead, use these tips to present information to your clients that’s accurate, helpful, and clear. If you do that, selling an annuity without an illustration can be smoother than selling one with an illustration.

For more sales tips and services, check out our other Insights articles and the Sales Builder tools.


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