At Legacy, we pride ourselves on offering a diverse range of products that empower our clients to secure their future. With a rapidly changing insurance landscape, it's essential to constantly evolve and meet the growing needs of our clientele. That's why I am excited to introduce a lucrative opportunity for our agents: selling Fixed Indexed Annuities (FIAs).

However, like any other financial instrument, to sell FIAs, one needs to be appropriately licensed. Let's delve into the licensing requirements and embark on this journey of diversification together.

What are Fixed Indexed Annuities (FIAs)?

Before diving into the licensing details, it's crucial to understand what FIAs are. FIAs are insurance contracts that offer the potential for growth based on the performance of a market index, with the added benefit of protection against market downturns. They provide an enticing mix of potential gains and security, making them an appealing choice for many seeking a balanced retirement strategy.

Licensing Requirements for FIAs

At the heart of the matter, the main question many of you might have is: "Do I need a separate license to sell FIAs?" The answer isn't straightforward, as requirements can vary from state to state, but I'll provide a general overview:

1. Insurance License: At the very core, selling annuities requires an insurance license. Many of you already possess a life insurance license, which, in most states, qualifies you to sell fixed annuities, including FIAs.
2. Annuity Training: A significant number of states mandate agents to undergo specific annuity training before selling any annuity products, including FIAs. This usually involves a one-time course that covers topics like annuity suitability, different annuity types, and best practices.
3. Continuing Education (CE) Credits: Selling annuities often requires agents to earn a set number of CE credits dedicated to annuity products. It’s essential to stay updated on state-specific requirements and ensure you're meeting these demands.
4. Affiliation with an Insurance Carrier: Beyond the licensing and training, to sell FIAs, you'd typically need to be appointed by an insurance carrier that provides these products. We are currently in talks with several providers, and once final, we'll assist you in navigating this process.

Benefits of Selling FIAs

Now, why should you consider diving into the realm of FIAs? Here are compelling reasons:

1. Diverse Product Portfolio: Offering FIAs can diversify your portfolio, enabling you to cater to a broader clientele with varied risk appetites.
2. Consistent Income: FIAs can be a stable income source, as they often come with attractive commission structures.
3. Meeting Client Needs: With the uncertain nature of today’s markets, many clients are looking for investment vehicles that provide growth potential without the volatility of direct market investments. FIAs fit this bill perfectly.
4. Professional Growth: Mastering FIAs and their nuances can set you apart as a knowledgeable financial advisor, not just an insurance agent. This distinction can lead to higher trust and more significant business opportunities.

Our Commitment to You

As Legacy takes this step towards embracing FIAs, I want to assure you that we're with you every step of the way. We're investing in:

1. Training and Resources: Expect workshops, webinars, and materials to ensure you're equipped to sell FIAs effectively.
2. Dedicated Support: Our internal team will be on standby to address any questions or challenges you might face.
3. Carrier Partnerships: We’re forging strong relationships with top carriers to ensure you have the best products at your disposal.

To conclude, the journey into selling Fixed Indexed Annuities is promising and can be highly rewarding. With the right license, training, and our unwavering support, I believe our Legacy team can reach new heights.

As we look back on 2022, we see an exceptionally volatile year. A stock market that would rival the scariest rollercoasters, media hyping up inflation worries that didn’t impact consumer spending all that much to a Fed raising interest rates four consecutive times between June and November by a whopping three-quarters of a point. Then announcing another increase of a half point before the end of the year.

Each time interest rates went up the stock market crashed. Then rebounded only crash again the next time. While the rise in interest rates does affect consumer big ticket item spending with people putting those off, it’s great news for Life Insurance producers.

Why? Because crediting interest rates within IUL’s and annuities went up! For those of you unfamiliar with what fixed and fixed indexed annuities offer, they are the only financial vehicle to guarantee your clients’ principle and guarantee them a retirement income no matter how long they live. They cannot outlive the money.

Their money grows when the stock market goes up and loses nothing when the stock market crashes. The writing is on the wall already for 2023 with indicators that interest rates will continue to rise to help stem off a recession.

As licensed life agents we often become complacent of selling simple issue products and most have indicated that you want to do more. Selling Annuities is your answer.

Your life license offers you the ability to sell fixed and fixed indexed annuities to your clients. Outside of taking an annuity suitability course for the state(s) you want to sell in and some product training through a carrier you need nothing else. The suitability courses count as CE credits towards your license renewal and only have to be taken once.

On all your next appointments or insurance reviews on past clients and policy delivery of your AEP clients, you need to ask a few questions: “How did your retirement portfolio work for you this past year?” “If I could show you how you could never lose any more of your retirement money and still receive the gains when the stock market goes up, would you be interested?”

For those agents contracted with Legacy our Annuity training shows you exactly what to say, how to say it and when to say it to start selling annuities.

For agents looking to expand and grow your career in life insurance sales Annuities are the perfect product for you. With past issues of 2022 and the prosects of 2023 your clients need your help!

For those agents who only market and sell Life Insurance or Medicare Supplement, it can be challenging to expand and introduce new products to your clients.

However, I strongly encourage you to look at annuities. They're not only a great solution to fill in financial gaps for a huge number of seniors, but they can help you reach your production goals.

For Michael Sams, annuities are his most-sold product – even more than Medicare Supplements. In 2020, Sams did $5,675,878 in annuity production alone.

For those of unfamiliar with annuities, an annuity is a retirement savings vehicle. It’s not technically an investment, because you’re not actually investing in the market. Rather it uses the stack market as a measure.

That measure determines your client’s gain. They will receive a return on thier money that is designed to help them save for retirement.

They can also use an annuity to pass on money to your beneficiaries. Annuities can help them avoid probate at death, which can be expensive and time consuming.

Most individuals use annuities as a retirement savings vehicle, while keeping the peace of mind that their money can be easily transferred or dispersed to named beneficiaries at death.

It works like this: An annuity requires a contract between the consumer and the insurance company.

The consumer deposits a lump sum (or periodic payments), and the insurance company delivers on their promise as it’s indicated in the contract.

A common example of a contract is a certain rate of return on the money and with fixed annuities or fixed indexed annuities a guaranteed floor of zero percent. Your clients will not loose their initial deposit if they keep the annuity for one year. Less than that and may loose the cost of some fees or a bonus, if applicable.

For example, the consumer might deposit a lump sum of $50,000. The insurance carrier then delivers on their promise of a 6% interest rate over the course of, say, 7 years. If at any point during that period the stock market drops below zero, your client loses nothing.

Not only does Legacy provide the carriers for Annuities agents are looking for but also, the training needed to start a conversation. We’ll help you overcome the most heard objection: “I’ve already got a guy for my retirement”.

Authored by: Lloyd Lofton

I was watching TV in my home office this weekend, and “that” commercial came on, with the guy who says, “I don’t sell annuities. I’ll never sell annuities!”

I’ve seen that commercial a thousand times and always either ignored it or thought about how misleading it is.

I wondered how many consumers see it and believe what is said.

Then this question occurred to me: How many agents see that commercial and, in their minds, tell themselves that those are the same reasons they don’t sell annuities. It was then that I got an email from Wink Inc. one of the many industry research services I follow. So, I open the report, and, wow: what great timing.

Wink Inc. highlighted the numbers for annuities sold in the second quarter of 2018. Indexed annuity sales for the second quarter were $17.3 billion. That was up nearly 22.0% when compared to the previous quarter, and up more than 18.4% when compared with the sales for the same period last year.

“This is a record-setting quarter for indexed annuities!” proclaimed Sheryl J. Moore, president and CEO of both Moore Market Intelligence and Wink, Inc.

She continued, “I’d say that indexed annuities are back in business, with an increase that tops the prior record by more than 11%!”

Traditional fixed annuity sales in the second quarter were $875.0 million; up 19.9% when compared to the previous quarter, and down 12.5% when compared with the same period last year.

Multi-year guaranteed annuity (MYGA) sales in the second quarter were $10.0 billion; up 23.4% when compared to the previous quarter, and up 27.2 % when compared to the same period last year.

With these great numbers showing growth in annuity sales I thought it might be time to look at some of the most common misconceptions agents have about selling annuities.

1. Annuities are hard to sell.

   The reality is annuities are easier to sell that life insurance because annuities serve the living motives of funding for old age and retirement. Most workers live into retirement, these needs are very real, and as the population mix gets older, these needs become greater.

2. Commissions are too low. I can’t afford to sell annuities. .

   Surveys consistently reveal that the average SPDA premium runs a little over $25,000.

   Some agents average more.

   Typical annuity commission rates range from 2% to 5%. That can amount to $500 to $1,250 on a $25,000 annuity sale.

3. Annuities don’t have renewals. How can I afford to retire?

   Most traditional single premium annuities do not pay trailing commissions in subsequent years and that scares most agents. But if you believe that there is no follow-up compensation, you not taking the long view of growing your book of business. We want 2 things from building our business, right, renewals and a large book of business that affords us future prospecting and needs to address.

   You can earn future commissions from:

   • Commissions upon annuitization.
   • Repeat sales and referrals.
   • Selling flexible-premium deferred annuities (FPDAs).
   • Replacing older contracts with split annuities A $50,000 annuity sold a little over 6 years ago now usually has a value in excess of up to $75,000.

   Lastly, it seems foolish to ignore the income enhancement potential of this vast and growing market.

4. 1035 exchanges can only be done from annuity to annuity.

   A lot of exchange opportunities are overlooked by agents, either because they don’t really understand the rules, or they don’t recognize selling opportunities. Overall, about 25% to 30% of all annuity business is 1035 exchange.

   For example, we all know you can 1035 exchange from a single-premium deferred annuity (SPDA) to an SPDA, but you can also exchange from:

   • FPDA to an SPDA,
   • SPDA to an FPDA,
   • SPDA or FPDA to a single-premium immediate annuity (SPIA)?

   You can also exchange from any life insurance policy to FPDA, or SPIA.

   And, you can also exchange from a fixed to a variable annuity, or vice versa.

   Think of all the missed opportunities for sales because of the misconception that you can’t exchange from a life policy (with cash value) to an SPIA (with new commissions and higher payouts) at retirement.

5. Males make up the vast majority of annuity buyers.

   In 2013, 51% of all annuity purchasers were female. At younger ages, they put money in qualified plans while over age 65, widows outnumber widowers by almost four to one. Widows are often conservative and have liquid assets.

6. Annuity taxation is very complex.

   Agents often think they must be a tax expert on the fine points of annuities to sell lots of it however annuity taxation is not complex. Many of the same provisions that are in life insurance are also in annuity contracts. Agents need to recognize that expertise in life or annuity taxation can bring them more sales, and to the extent that this misconception is not recognized, it limits sales.

7. People generally like to take risks to earn a higher return.

   Most retirees are inherently conservative when it comes to saving for or living into their retirement years. Especially people over 50, they generally want safety and guarantees. Individuals who repositioned their savings to escape extremely low interest rates at the bank still prefer to avoid risk.

8. Life income options are not a “good deal.”

   Most agents have looked away from the sale of immediate annuities with life contingencies. When pre-retirees approach retirement at their company you find that the majority are either doing an IRA rollover for longer deferral, or they are taking some form of guaranteed life income.

   You find those who enter their retirement years love lifetime guarantees, and given an option, will frequently choose an income they cannot outlive. One way to accomplish this is to place more of these funds in a SPDA where other systematic forms of withdrawal can be administered reliably, economically, and with safety, until the time is right to elect an immediate annuity. Although agents might just sell more immediate annuities (using the split annuity concept.

9. Compound interest (and tax-deferral) is not important or significant.

   Agents have a misconception about the power of compound interest (and tax-deferral). Agents should be falling all over each other trying to sell annuities, and that is not happening, I’m guessing, because agents don’t really understand the powerful effect this can have on a client’s retirement years.

10. It’s easier to sell $200 per month in a life policy than to transfer $25,000 into an SPDA premium annuity

    This simply is not true. The problem most agents have in selling life insurance is the prospect hears the agent saying they must find “new” money in their monthly disposable income to buy a product they are not convinced they need. (Now calm down: Yes, I think life insurance is important.)

    • It’s easier to sell to meet “living” needs.
    • It’s easier to transfer money than to find new, monthly or annual premium that is not currently in the budget. (See my point?).
    • The $200 is often seen as an expense.
    • The $25,000 is usually perceived as an investment, via a transfer of funds.
    • Clients are simply repositioning existing money.
11. Tax deferral doesn’t work if taxes are higher when you retire.

    Higher taxes are bad for all of us, but think how bad it is for those whose interest is not tax-deferred. Deferral is still better.

12. Annuities are a “specialty.” Since I’m not a specialist, I should not sell them.

    Now, if you have not sold many annuities because you see doing so as a specialty consider that immediate annuity provisions are in every life policy you sell. And cash values serve accumulation needs like annuities. The need to save, and the need to fund retirement, are the most fundamental values and needs retirees face.

13. To sell annuities, you must prospect amongst the wealthy.

    The SPDA (and FPDA market) is a middle-class market!

    The same people who put money in banks buy annuities and, according to surveys, the average income is under $50,000 per year!

14. The 10% federal excise tax penalty for surrender / withdrawal prior to age 59½ is a significant bar to annuity sales.

    Seniors retirement money is already saved, and income taxes have been paid.

    Retirement money for seniors has been earmarked as “long-term” money, and, since savers have earmarked the money for long-term use, they have no intention to surrender / withdraw before 59 ½.

15. Annuities are not a large or important market.

    A lot of agents have built their businesses around protecting families against the risk of premature death. With 78+ million of our population now aging into their retirement years, the risk of living too long is just as important a risk, if not more important.

According to the Wink report I referenced in this article, annuity premiums in the second quarter increased dramatically. That shows that annuities are seen as the right vehicle to address the risk of living too long, and outliving retirement money saved. Isn’t it in your own financial interest to start picking up the wallet share you are leaving behind?

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Lloyd Lofton started with John Hancock in 1977, he is the author of “The Sidewalk Executive”, and “Leads to Results”, he is the founder of Power Behind the Sales, and managing partner of 7 Figure Sales Tools, a sales and leadership coaching and training company.