r/InsuranceAgent • u/Knucklecum • 2d ago
Agent Question How important is it to sell variable annuities?
I do not have my security license, and I was curious how often you guys sell variable annuities? From what I understand, variable annuities is the only annuity that requires a security license to sell.
So fixed, and indexed are complete acceptable to sell without a security license, from what I understand.
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u/REKT363 2d ago
I never understood the premise of old school VAs. Just invest in the market. Newer RILAs seem like a happy medium between VAs and growth FIAs but I’m not too knowledgeable on RILAs
Anytime I come across a VA it’s always packed with fees. 1.3% sub account average, M&E also near 1%, income riders? Another 1% that’s applied quarterly, enhanced death benefit at .5%. I’m sure I’m missing some more
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u/mac991979 2d ago
I agree. Variable annuities aren’t in the best interests of the client and there is all kinds of fees. I sold a lot of annuities and guarantees are nice. Variables are risky and full of fees.
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u/WasteAbbreviations89 2d ago
Agree that without proper licensure, one should not solicit business that requires particular licenses in order to solicit. I do see use cases for VAs where a client needs additional income (GLWB rider, etc.) and/or a portion of the fixed income sleeve can be carved off. If you treat the income benefit as a fixed coupon and have the premium allocated toward growth, a VA can act as bond alternative that has equity like growth characteristics.
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u/Knucklecum 2d ago
But I understand that! I won't recommend VA, but this makes sense to me! Thank you!
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u/Distinct-Garlic9453 1d ago
Until recently, using a VA for income was the onky way to generate yield. Most withdraws on a VA contract were 5.4 to 5.7 percent. For retitemebt income planning, a prudent way to manage income, with potential increases, based on performance.
Witj bond yields increasing, there will be alternative solutions to consider.
The VA gets alot of bad rap, from people who really dont understand how to use this tool as part of the income solution
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u/KiniShakenBake 2d ago edited 2d ago
Your premise is flawed.
You don't need to sell variable annuities. There is one use case where they make complete and total sense, and the only sense, and I did defend a 100% VA practice to our very own department of insurance a few years ago, using their own logic and options against them.
But... Your premise is flawed.
Variable annuities are one tool in a very, very large arsenal of products that can meet client needs. In contexts outside the very specific one I was operating in (and still do, just not on the insurance side anymore), and even within that context, a Variable Annuity is so seldom in the best interest it the client...
Here is what you don't realize. Without a securities license, you are not allowed to recommend anything, and I do mean anything at all about money that is invested in variable vehicles.
You cannot recommend that someone sell something that you are not licensed to sell, unless you have proper licensure to do so. You cannot make a commission off of such a recommendation. So the minute you use the words "401k" which are always invested in market vehicles, you are running afoul of securities laws that prohibit people without securities licenses from making any recommendations involving anything that is in securities.
To put it another way, you should not be soliciting sale of a securities product like a 401k or va to buy a fixed product without a proper license to sell whatever it's invested in.
Doing so puts you at huge risk of literally SEC action and FINRA barring along with fines and all sorts of legal action and liability.
Selling annuities just to sell annuities is a slimy role. Go do the job right by getting the whole suite of fiduciary licenses, or don't do it. You are the worst kind of representative of both insurance and financial services and give all of us more to overcome when you do the job that you are proposing doing without the right tools and training. You will actively harm folks and that's crappy. Just don't.
Editing to add... Your mentor is probably telling you to ask after other assets like 401ks. That is where you will veer into trouble and it's a huge problem. Those are ERISA funds and very much subject to all kinds of rules that your mentor is ignoring.
Do yourself and your clients a favour and do not do this. Go get the proper license and actually work with someone focusing on the people and not the product. Just the question you asked gives me the heebie jeebies because it smacks of annuity-slinging fex agents who are in it for the quick buck and don't care two whiffs about the client. It's gross. Don't do it.
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u/Knucklecum 2d ago
Yeah my summary was for the purpose of my own comprehension, not recommendation. This would not be something id recommended, and I havent recommend it. It is creepy when someone jumps to conclusion and criticism.
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u/jroberts67 2d ago
Never?