You know that annuities can play a valuable role in a client’s retirement strategy. But do your clients and prospects? With features like tax deferral and principal protection, they offer unique advantages, but their complexity often leads to misunderstandings or misplaced fears. It’s crucial that your clients fully grasp how annuities work and dispel common myths before moving forward.
Addressing Annuity Questions
1. “Aren’t Annuities Exposed to Stock Market Risk?”
Clarification: Fixed-indexed annuities credit gains based on index performance (like the S&P 500 or Dow Jones), but clients’ principal isn’t directly invested in the market.
Talking Point: You might point to downturns like the 2008 crash or the pandemic sell-off—times when market-linked investments dropped sharply, yet fixed annuities safeguarded client investments.
2. “What About High Fees—Aren’t Annuities Expensive?”
Clarification: While fees do exist, all retirement products (like IRAs and 401(k)s) carry costs too.
Talking Point: Those fees can fund added benefits—such as lifetime income riders—that offer ongoing security. Emphasize transparency: clients should understand all associated costs.
3. “Can’t I Withdraw Cash if I Need It?”
Clarification: Annuities allow early withdrawals, but penalties can apply depending on the contract, the client’s age, and how long the annuity has been held.
Talking Point: Stress that annuities are designed as long-term retirement income vehicles, not emergency funding. For immediate liquidity, pair them with a cash-value life insurance policy.
4. “Annuities Don’t Pay as Much as Other Income Sources.”
Clarification: While payout amounts may be lower than those from pensions or withdrawing from a 401(k), annuities guarantee consistent income.
Talking Point: Frame this as a risk vs. reward trade-off: guaranteed checks for life versus a chance at higher income—but with the risk of depletion. Highlight that lifetime income riders eliminate longevity risk, and some modern annuities include death benefit features for heirs.
5. “Why Choose an Annuity Over a CD?”
Clarification: CDs and annuities differ significantly in liquidity, tax treatment, interest rate structure, and growth potential.
Talking Point: Offer a clear comparison to show how annuities may better serve retirement goals, while encouraging clients to research and understand both options before deciding.
Empower Your Annuity Conversations with Clarity and Confidence
Every annuity discussion is a chance to break through the noise—to educate, reassure, and provide real value. By listening to client concerns and addressing misconceptions with clear, personalized guidance, you become more than a salesperson—you become a trusted partner in their financial journey.
And the right tools can make all the difference.
To help you guide more informed conversations this Annuity Awareness Month—and throughout the year—IAMS has updated one of its most popular resources: the 2025 Annuity Awareness Sales Kit. This comprehensive toolkit is designed to help you demystify annuities and meet objections with facts, not friction. Inside, you’ll find:
- The top annuity solutions tailored for today’s market climate
- Client-facing forms and fact-finders to uncover real retirement goals
- Ready-to-use social media content to attract attention and spark dialogue
- A client-ready PowerPoint deck perfect for one-on-one or group presentations
- A Volatility Risk flyer to reframe the market safety conversation
- Consumer research insights that validate your message
- Concept pages, email templates, and more
Whether you’re educating a first-time prospect or helping a longtime client reevaluate their strategy, this kit gives you the clarity and confidence to lead the conversation—and position annuities as a smart, secure part of the retirement puzzle.
