Did you know that fixed annuity sales rose 26.9% in 2018, and 4.6% in 2019? When compared to the performance of variable annuities within the same periods, this is a massive growth spike.
The popularity of fixed annuities is not surprising, however. Fixed indexed annuities (FIAs) provide eligible individuals with a number of benefits because they are risk-free, yield decent & guaranteed rates of return and even garner tax deferral benefits.
Besides being in demand, fixed annuities can also net agents relatively attractive fee percentages. Depending on the annuity type, fixed index annuity sales can yield agents up to 8% in commissions.
However, to tap into the annuity sales market and realize these commissions, agents need to learn effective annuity sale strategies.
Fixed Indexed Annuity (FIA) sales can provide a reliable commission stream for an agent who has done their due diligence to learn the basics of selling them and also works hard to consider their clients’ needs.
Understand Your Client's Needs
One of the most important steps in selling annuities is taking your client's needs into consideration. Instead of "marketing" different annuity products to them, start by asking some key questions such as:
- What is the current rate of return on your money?
- Which is more important to you - less risk or the potential for higher returns?
- What is your current risk level?
- What are your future financial plans?
The answers that your clients give to these questions can then determine which annuities product are best suited to them.
With certain fixed index annuities, clients can enjoy a guarantee on their money. And if they wish, they can also choose to add interest crediting strategies. These FIAs are generally based on the S&P 500 or other popular indexes. Depending on how the stock market performs, your client has the opportunity of earning higher gains.
In order to successfully make Fixed Indexed Annuity (FIA) sales, it's very important that you dig deep to discover your client’s financial needs. During your initial meeting, make sure you carefully note their answers to your questions so you can refer to them later.
One of the biggest draws to fixed indexed annuities is that clients can reap higher returns than if their money is currently in a savings account or cash deposit. To increase your fixed annuity insurance sales, it's important that you illustrate this to your clients.
Historically, CD rates were relatively decent. However, fast-forward to 2020 and CDs are paying pennies on the dollar.
These recent, all-time low CD rates are a result of the Fed's emergency rate cut. However, before the rate cuts, the best CD rates were still significantly lower than the average rates of return on Fixed Indexed Annuities (FIAs).
Find Out Where Your Client's Money Is
One of the key questions to keep in mind when selling annuities is, “Where is my client's money at the moment?”
For example, if your client is currently keeping their money in a CD, this means that fixed indexed annuities will be able to provide better rates.
On the other hand, maybe your client is currently invested in the stock market. If so, they might be experiencing good rates of return, but they may also be opening themselves up to increased risk.
Pro Tip: The market base for Fixed Indexed Annuities (FIAs) is typically low asset retirees on a fixed budget. Most of these clients won't be in a position where they can afford to lose guaranteed interest.
Ensure that you explain the importance of eliminated risk that annuities bring and illustrate how an unexpected market turn could result in unexpected losses.
If your client would still like to be a part of the market with no downside market risk, then an FIA product might be an ideal compromise where they may experience heightened returns when the market is up. And the best part is there are zero risks to them because their money is guaranteed.
Selling Annuities Online
Do you want to make fixed indexed annuities sales online?
If so, then you need to be aware of the licensing requirements.To sell FIAs, you need to have a life insurance license. And if you are planning on selling annuities online, you will also need to check your state’s course requirements for the areas you want to target. Additionally, you'll need product certifications from the companies whose annuity products you wish to sell.
Pro Tip: Want to receive training on how to sell annuities online and over the phone? If so, check out our insurance training programs.
Besides making sure that you are licensed to make online annuity insurance sales, you'll also need to compile a sales and communication plan.
Younger clients are more comfortable making online, financial product purchases. However, those in their sixties and above may be more hesitant. That’s why it’s important to have effective marketing strategies in place for successful online annuity sales.
You'll Need E&O Insurance
To begin selling annuities, whether online or otherwise, you will need to take out E&O insurance.
For those unfamiliar with it, E&O stands for Errors and Omissions. E&O coverage protects you from lawsuits and claims that you made an error in your services.
If you want to learn more about E&O insurance, check out this guide where we list the top insurance carriers that require E&O coverage.
Focus on Education Not Selling
Another tip to keep in mind for annuity insurance sales is to focus on informing your clients instead of hard-selling them. This might sound counter intuitive. But in today's age, many people see this simply as an “too aggressive” sales tactic.
Instead of punting products at your clients, focus on educating them about the different choices available. This will build a bond of trust and rapport and give them the confidence and ability to make an informed decision.
Boost Your Annuity Sales Today with the Right FMO
Now that you have some of the most important annuity sales tips up your sleeve, it's time to start bringing in the clients and helping them make the best choices for their future.
Want to know another key tip? Having the right FMO on your side can greatly enhance your success when it comes to selling annuities.
FMOs (Insurance Field Marketing Organizations) help you grow your sales quickly through their networks and systems designed to help seniors find the right annuity products.