Probably you’ve heard your local Agent talking about selling annuities separate from their usual life insurance products. You may have even asked, to learn annuities aren’t always a standard offering. Confusing, isn’t it? Rest assured, annuities are one more tool available to Agents when helping protect families’ financial future.
What is an annuity?
At its most basic level, an annuity is simply a payment made on a regular basis. For the purpose of this article, we’re going to discuss life annuities, which can be an extra source of income after retirement. In life annuities, you’d pay premiums for a set amount of time, anticipating you live long enough for the annuity to mature, at which point payments would be made back to you. When used as a retirement hedge, that would mean paying premiums while employed with the goal of having the annuity mature at or near the same time you retire from working.
A fixed annuity is one where the interest rate is known up-front. You can either agree to the interest rate (set by the insurer) or move along. An indexed annuity is similar to a fixed annuity, but you have options on interest rates. That way, your premiums paid may be lower, though the payments after maturation would be similarly lower.
Many variations of annuities exist, and if you’re shopping for an annuity plan, we recommend speaking with a financial advisor about the plan best suited to your needs1.
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Who can sell annuities?
Life and fixed/indexed annuities can be sold by licensed life insurance Agents2. Licensing is different state by state, but usually requires passing educational courses and a licensure exam. If you are interested in becoming a licensed life insurance Agent, the National Association of Insurance Commissioners maintains an interactive map with state-specific qualifications3.
Categories: Insurance, Life Insurance