Why you should and CAN be telling your clients about ANNUITIES at a 3% interest rate.

Posted by Nickelle Leist on Tue, Aug 24, 2010 @ 08:16 AM

Many brokers have excuses for why their Fixed Annuity business is down this year. Chief among those excuses is the “interest rate argument.”

“My client is waiting for rates to go up.”  “I can’t sell a 3% annuity!”  or “when are interest rates going up?”

 “WHO CARES!”

Interest rate factors should not slow Annuity sales.   

When your clients say they are going to “wait” for interest rates to change, ask them to consider the following:

1.  The national average money market rate is 0.93%. Wouldn’t it be incredible if they went up by 80 basis points per year to end up at 5% five years from now? Pretty unprecedented, right? Without compounding, that would give our client a total  return of a little less than 18% before taxes

2.   Maybe a one year CD is the answer. The national average rate is 0.68%. If those rates doubled each of the next five years, that would be pretty extraordinary. Again, the client would have earned a total of 18%. Remember, this 18% number does not take into account any compounding or tax implication

3.  If a client chose a five year CD, that money would yield approximately 10% over that period. This same client would need to earn 8% in year six just to get back up to that 18% total over six years. 

When you and your clients take into account the effects of tax-deferral, interest rate compounding, free annual partial withdrawals, nursing home and terminal illness waivers and the safety of an A rated Insurance company; there is absolutely no reason to hide from 3% interest rates.   3% interest rates are still competitive.  Now how about you pick three clients that could benefit from an annuity, then send your quote request to newbusiness@provada.com and we will quote you the most competitive interest rate.