Careers Selling Annuities
A good salesperson can sell just about anything, including annuities. Salesmanship is the foremost criteria for becoming a successful annuity agent, and there are many opportunities to apply those skills.
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History
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Because annuities are insurance policies, annuity salespersons are licensed to sell insurance. If they sell variable annuities, they must also be licensed to sell securities by the U.S. Securities and Exchange Commission and registered with the Financial Industry Regulation Authority (FINRA). When the legislature deregulated the financial services industry in the 1990s, many different organizations began selling insurance and investments. Annuities are now sold by banks and brokerage firms as well as insurance companies. Annuities got a bad reputation in the 1980s when they were oversold as safe alternatives to retirement accounts, generating lofty fees and premiums while investors misunderstood the investment risks. The industry pressured agents to recognize the insurance element of annuities.
Significance
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Annuity salespersons must understand how annuity policy features work and be able to clearly explain them to investors. Annuity salespersons must help investors decide when annuities are suitable investments based on their individual circumstances. Over time, they must continue to provide advice to clients. As the burden of retirement planning shifts from employers to individuals, the Department of Labor continues to predict the need for financial advisors, including annuity salespersons.
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Function
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Like many other sales positions, annuity salespersons are paid a commission based on the face value of the policies they sell. Agents earn "residuals" from the insurance company as policies renew each year. Annuity agents must be "appointed" by insurance companies to sell their products. Some agents are dedicated to a specific insurance company, but most are brokers appointed by several firms from which they can select the most appropriate policy for a given investor. Most annuity agents don't limit the products they sell to annuities. Many become "financial advisors," selling mutual funds, stocks, insurance and other types of financial products to meet their client's needs.
Types
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Annuities are a popular choice for government and non-profit retirement plans. Agents who pursue this market are actually targeting the organizations as prospects as opposed to the individuals who will eventually own the policies. Wealthy investors who have contributed the maximum amounts to other retirement plans are another major market for annuity sales as well as retirees, who shop for high-interest-paying, fixed annuities for income. Annuities premiums are still considered expensive compared to other investments due to the "guarantee" nature of the policy. The guarantee implies that the amount accumulated in the annuity will be used to calculate an amount paid to the owner for the rest of his life. Operating similar to a pension, the risk that the investor will live longer than expected is borne by the insurance company. Sales agents must be able to overcome the pricing objection to gain new clients.
Geography
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Insurance salesperson licenses are regulated at the state level, and each state has requirements for the training and fees necessary to become an agent. Many require a background check, a class, a test, annual continuing education classes and annual license renewal fees. In general, becoming an agent can take anywhere from a couple of days to a couple of weeks. Annuity agents can be licensed and appointed in multiple states at the same time and must be licensed in the states in which their clients live. Many financial institutions have training programs that help new annuity agents learn about the policies and how to sell them.
Considerations
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The sales position is very autonomous. Annuity agents must find their own prospects and convince them to become clients. While an aptitude for math is a helpful skill, most agents use computer programs to perform calculations such as determining the amount of insurance needed or the amount of premiums. Soft skills such as relationship building, negotiation and sales are much higher priorities. College degrees are generally not required.
Benefits
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Agents often cite the satisfaction of helping someone achieve their dreams through investing. As a type of insurance sales, those who are good at selling can accumulate a large number of annuity policies and earn thousands of dollars in commissions. Annuity agents are normally paid on commission once a month, based on previous sales. Some organizations offer bonuses to those who achieve certain sales thresholds. Agents are generally not paid for their knowledge of annuities, only for increasing sales.
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