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Annuities

What is an Annuity?

An annuity is a financial product that provides a steady stream of income, typically used for retirement purposes. It is a contract between an investor and an insurance company, where the investor makes a lump sum payment or a series of payments, and in return, receives periodic disbursements starting either immediately or at a future date.

Types of Annuities

There are several types of annuities, each with its own characteristics:

Fixed Annuities

Provide guaranteed minimum income payments. The interest rate is fixed and does not change over time.

Variable Annuities

Payments vary based on the performance of investments chosen by the investor. These can include stocks, bonds, and money market instruments.

Indexed Annuities

Returns are linked to the performance of a market index, such as the S&P 500.

Immediate Annuities

Payments begin almost immediately after a lump sum is paid.

Deferred Annuities

Payments begin at a future date, allowing the investment to grow over time.

Qualified Longevity Annuity Contracts (QLACs)

Provide income later in life, typically starting at age 85.

Qualified and Non-Qualified Annuities

Qualified annuities are purchased within a retirement plan, while non-qualified annuities are purchased outside of retirement plans.

Requirements for Selling Annuities

To sell annuities, you must meet certain licensing requirements:

  • State Insurance License: Required for all types of annuities.
  • Securities License: Required for selling variable annuities, typically a Series 6, Series 7, Series 65 license.
  • Training: Some states require specific training courses, such as a four-hour training course for new producers.
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Compliance for Selling Annuities

Compliance involves adhering to both state and federal regulations:

  • State Regulations: All annuities are regulated by state insurance commissioners.
  • Federal Regulations: Variable annuities are also regulated by the SEC and FINRA.
  • Best Interest Standard: Producers must act in the best interest of the consumer when recommending annuities.

Contracting to Sell Annuities

The process of contracting to sell annuities typically involves:

01

Obtaining Licenses
As mentioned, you need the appropriate licenses.

02

Submit a Contracting Request
MyContractingteam can assist you with contracting and appointments. Insurance companies require an agent to complete contracting to access contracts.

03

Completing Applications
Submit applications based on the guidelines of your carrier.

Sales Process of Annuities

The sales process generally includes the following steps:

01

Research Annuity Buyers
Look for reputable companies with good service and reviews.

02

Receive a Quote
MyContractingteam can assist you with contracting and appointments. Insurance companies require an agent to complete contracting to access contracts.

03

Consult with an Expert
Review the offer with a financial advisor.

04

Complete the Paperwork
Fill out and submit the required documents.

05

Receive Your Money
Once everything is approved, you receive the payment.

How to Sell Annuities

Selling annuities involves understanding the needs of your clients and matching them with the right product. Here are some tips:

  • Ask the Right Questions: Determine the client's income needs, risk tolerance, and retirement goals.
  • Present the Best Product: Based on the client's needs, present the most suitable annuity product.
  • Provide Clear Explanations: Explain the features, benefits, and potential drawbacks of the annuity.
  • Offer Ongoing Support: Maintain a relationship with the client to address any future needs or concerns.
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