Believe the Annuity Policy, Not the Sales Pitch

Own Annuities for what they “Will Do.”

Do you watch cable TV, listen to the radio, or surf the internet? If so, you have been inundated with annuity sales pitches. It’s important to know how to filter the sales pitches out. The contractual guarantees of any annuity policy are the truth you want to find behind the pitch.

Every sales pitch is made to sound appealing on the surface. Local bad chicken dinner annuity seminars and face-to-face sales presentations can be even more fantastical than media. All high pressure sales tactics are designed to impress you and help you make a quick emotional decision. It is your job to fully understand the contractual guarantees of any policy before you sign.

Annuities are contracts

Annuities are contracts issued by life insurance companies. You create a legal agreement between you and the issuing carrier when you sign the contract. The contractual guarantees are backed up by the full faith and credit of the carrier. You should base your decisions on what is written in the annuity policy, disregarding any agent promises of amazing returns.

Ask for a specimen policy and/or a copy of the application before signing day

You should have time to read an annuity policy before you sign it. Most agents will not offer this service. Ask for a specimen policy and/or a copy of the actual annuity application before sitting down to sign. You can read the policy you will own without time constraints. You should be familiar with your contract, not just an sample policy. Agents can also provide a copy of the application you will be asked to submit. Never hesitate to ask for copies of a specimen policy or the application via a PDF through email, or a hard copy mailed to you. You need to find a new agent, if they claim they cannot provide this paperwork.

Buy the contractual guarantees, don’t buy into the sales pitch

You should always own an annuity for what it will do, not what it might do. You own annuities for their contractual guarantees, not for hypothetical possibilities. Never allow an agent to convince you to buy an annuity for hypothetical, theoretical, back-tested, non-guaranteed or hopeful return scenarios. Don’t buy the agent’s dream sales pitch; rather, buy the contractual realities of the policy. Contractual guarantees transfer risk from you to the carrier.

Every proposal generated by an annuity carrier has a page that shows “guaranteed” returns. It is the only page you should look at, even if you are purchasing a variable or indexed annuity. These annuities may have unknown future returns, and they may not. Agents may want you to focus on the unknowns instead of reality. Educated consumers buy annuity contracts for the guarantees, so the worst case scenario fulfills their needs.

Have your agent sign off on their own sales pitch

Since you are at the mercy of any agent’s moral fiber during the selling process, protect yourself! Remember you are the consumer checking out a product before you buy it. Make the agent “own” their sales pitch. How does this work?

  • Write down every single item exactly how you understand it after the agent finishes their sales presentation. Be as detailed as possible.
  • At the bottom of the page sign and date that piece of paper.
  • The next step is particularly important. Simply turn the paper around, slide it to the agent, and ask them to sign and date it.

If they refuse to sign off on their own sales pitch, then you have your answer about moving forward. When they sign and date your understanding of the sales pitch, they are legally owning what they have promised. You will win either way.

If it sounds too good to be true, it ALWAYS is with annuities

Parents and grandparents tell us if something sounds too good to be true it probably is. The annuity sales pitch that sounds too good to be true is ALWAYS too good to be true!

Remember you are buying an annuity contract when you purchase any type of annuity. Do not buy the agent’s version of that contract, but rather study the agreements contractual guarantees carefully.

Stan Haithcock

Version 1 first Published on The Street Nov 1, 2016 9:27 AM EDT