Retirement Income Journal

How to Choose an Annuity Issuer

Shopping for an annuity, like shopping for a car, involves questions about the manufacturer of the product. Do their products perform as expected? Will service quality be high? Are they likely to stay in business? We show you where to look for answers.

When you shop for a new car, what are your criteria? The manufacturer’s reputation? The model or style of the vehicle? Its main function or purpose in your life? The proximity of the dealer? Or maybe you already have a specific automobile in mind.

Your inquiries wouldn’t stop there. You’ll want to know, for instance, what Consumer Reports or the Kelly Blue Book says; whether a car is likely to perform as expected and hold its value; which dealers provide affordable, get-it-right-the-first-time service.

Annuity shopping isn’t so different from car shopping, except that, as an adviser, you’re shopping for a client, not for yourself. And, as an adviser, if you’re not affiliated with a life insurance carrier, a broker-dealer or an insurance marketing organization (IMO), you might be doing the due diligence on your own.

In this article, we’re talking about finding a life insurer that issues annuities, not about choosing a specific product. At this point in the process, we assume you’re looking for transparency, predictability and great service rather than a specific product’s price, yield, monthly payout or the size of the commission you might receive.

Maybe you’ve never driven down “annuity road” before. With more investors asking safe retirement income or downside protection, and with annuity issuers now offering more fee-based products to Registered Investment Advisors (RIAs), many advisers find themselves grappling with annuities for the first time.

If you’re new to the annuity world, your initial questions might include:

• What does the client need?
• Which life insurers specialize in which annuities?
• What life insurers are safest to invest with?
• What about those ‘platforms’?
• Who offers product comparison tools?

In this primer on choosing an annuity provider and a contract, we’ll briefly answer these questions. The challenge can be both simple and complex, but there are rules of thumb. As annuity guru Sheryl Moore, CEO of Winkintel.com, put it, “First, do your due diligence on the company, on their financials, and on their management. Then, do due diligence on how they treat their in-force clients and business. Only then should you look at their product offerings.”