I have a client...

henrya · 09-27-2006, 04:14 PM

That is interested in an annuity. I have never sold one and am not sure what type is right or what company is best. She is 65years old and is looking for something safe that can give her a good return on investment. She is only interested in taking out the interest (not principle) for living expenses. Where do I start?

MIBizInsurance · 09-27-2006, 04:22 PM

Get out and meet an annuity expert that you have confidence in and trust, work out a comp. split and refer her.

Putting her in the wrong annuity will cause you both a huge amount of grief.

henrya · 09-27-2006, 04:28 PM

I understand that but I would still like to be in the loop so I can learn...

henrya · 09-27-2006, 04:33 PM

You are right. I guess the question I have is: If I have a 65 year old wonam that is getting 5.5% from a CD what can I offer her that will allow her to take just the interest out that is better than the cd. I need annuities 101 I think. I am licensed to sell them but know nothing about them.

sman · 09-27-2006, 04:56 PM

Originally Posted by henrya

you are right. I guess the question I have is: If I have a 65 year old wonam that is getting 5.5% from a CD what can I offer her that will allow her to take just the interest out that is better than the cd. I need annuities 101 I think. I am licensed to sell them but know nothing about them.

She's not going to get a better return than her CD. CD's are considered short term investments and with the Federal Reserve raising the short term rrates 17 consecutive times, CD rates have moved upward.

Annuities are generally tied to long term treasuries due to the regulation requirements on the insurance company (which a bank doesn't have). And long term rates have actually dropped over the past several months. As a matter of fact, the 10-year Treasury is at 4.59%. So it would be impossible for an insurance company to offer a guarantee over a long term investment much higher than what we see in the 10-year treasuries.

The only possible advantage she would have with the annuity is that the rate could be guaranteed for a longer period of time than the CD. People who played the CD switcharoo in the late 90's through 2003 or 2004 saw their rates go from 6% or so down to 1%. Had they been locked into something paying maybe 5%, they would have been real happy in 2002, 2003 and 2004.

It may be possible to get her a guarantee of just under that CD rate for maybe 5-7 years. But you're not likely going to find a fixed annuity with a 5.50% guarantee.

MIBizInsurance · 09-27-2006, 05:45 PM

Not saying not learn or stay involved but its not like you can just and read a 5 page book then go make the sale.
Well you can....

You get the point and it sounds like your trying to do what is right or you wouldn't even be asking the question.

Still surprised that Annuities don't require additional license to sell at least here in MI.
Think there was 2 questions on the test regarding them.

Thats just a general thought not geared towards you. Have ramped up (seminars, readings...) on annuities and still would seek advice before making a sale.

***Melmunch3*** · 09-27-2006, 05:59 PM

Sman is right, you will not find a better return. www.annuityfyi.com is a very good place to start, but some of the rates they show are prospectus products, so be careful. Also, since she is not looking to accumulate money, but to live off of the interest, there are no real tax advantages either. There could be a small advantage of removing the principal from the probatable estate, but I doubt she is in that category.