Fixed Annuities

Created

Mar 19, 2025 5:15 PM

Fixed annuities can be a great way for retirees to lock in guaranteed income based on their expected spending habits.
The most common annuities are 2-5 years; beyond a 5-year term, the rates become similar to that of a 60 month Certificate of Deposit (CD)
Typical amount is $80k upfront premium
At expiration, your client will receive a letter within 30-45 days offering them to roll-over; taking it expiration will be a taxable event on the gain. Rolling it over defers the tax.

As of 5/12/22, strongest carriers are:

Timeline to contract varies by carrier; between 2 days to 3 weeks
Requirements include: life license, AML training, E&O, ~10min product-specific training

Determine their retirement target for monthly income
Determine their Social Security benefit amount by creating a username and account on SSA.gov and using their calculator estimator
Determine the gap between their benefit and their target, and back into the premium amount
Key difference between annuity and a CD is that the annuity has a liquidity cost; there’s a termination fee. But you receive a higher rate in return.