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Annuity Sales and the NAIC Model

Annuity sales by insurance companies are a big revenue generator for all insurers across the country. Insurance agents sell various kinds of annuities like variable annuities, retirement annuity or a deferred annuity. The sales are made to individuals are based upon their requirements. However, it is important to follow the guidelines set by the National Association of Insurance Commissioners (NAIC) which creates a healthy annuity sales environment. Let us see how best we can sell annuity and benefit the investor to get the best returns after retirement.

It is very important for annuity sellers to educate the customers about the product that they are selling. The annuity sales person should explain the rates and the fallout of the change in rates for the investor. They should also explain to the investor how they can access their money and also outline the fees for a premature withdrawal. It needs to be understood that an investor invests in annuity to ensure that there are long term benefits to them. If the objectives of the investment are not achieved it may have serious repercussions on the investor’s finances.

All insurance companies and annuity sellers should adopt and implement the NAIC Suitability in Annuity Transactions Model Regulation to ensure transparency in all annuity transactions. This model sets standards which ensure that customers are buying annuities which suit their financial needs. Till date half of the states across the country have adopted this model. The sellers of annuity products should have professional designations and certifications. This will ensure that they are qualified enough to make the annuity sale and give the investors correct information of the product that they are selling. The insurance companies need to make all efforts to ensure that the guidelines for selling annuities are implemented at all of their operations across the country. It has been long since the Government allowed banks to sell annuity products. This has increased the number of annuity sellers manifold and also the challenge of upholding the transparency of a annuity sales transaction.

From an investor’s perspective, it is important to know the products that they are buying. This is especially true for people who are close to their retirement. There are some common signs of deceptive sales practice.  A high-pressure sales pitch should be taken with a pinch of salt. Beware of “limited-time” deals especially from a caller who is calling-up very often. A scam artist may try to play on the investor's time fear by trying to convince the investor to change coverage quickly. Investors have to do adequate research on the product that they buy. If an annuity sales person is not able to prove their credibility, they may never be able to do it.

Ways to improve your credibility prior to meeting:

1. send educational material
2. send details about yourself, your experience and your credentials
3. If you have willing clients, get their written testimonials about working with you and provide it to prospects
4. during your annuity sales presentation, use third party evidence--articles form the Wall Street Journal, Business Week or other well known publications
5. show a copy of the NAIC model on annuity sales and state how you comply with it

Good ethics results in more closed sales.


Annuity Sales | Annuity Leads | Financial Advisor Leads | Financial Planning Leads

One thought on “Annuity Sales and the NAIC Model

  1. Anyone who aims to be in the annuities industry for the long-term should be following the guidelines in your post. A well informed buyer is usually a satisfied buyer who will recommend you to their friends and acquaintances. A pressurized buyer is much less likely to do this.

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