Is Someone Selling You An Annuity? 9 Tips You Must Know

Scott Brooks, MBA, CFP®
5-7 min read

At Annuity Resources, we have a saying.

It’s not what you know about annuities that gets you into trouble.

It’s what you know for sure that just isn’t so.

This is why we believe every American should do their homework and be educated about annuities before buying one.

Here are some tips we have put together to help guide you.  These tips will be beneficial if you are researching index or variable annuities.

Look For Proof!

When a company tries to sell you an annuity, ask yourself this one very fundamental question.

Is the company telling you their recommendation is the best on the market?


Are they showing you proof from a reputable third party that their recommendation is the best?

Talk is cheap.

Our society has changed, and more people feel it’s ok to tell “white lies.”

Last year I had a well-known annuity marketing company tell me that lying to consumers was “ok” as long as they did something good for them in the long run.

Crazy? Yes, but this really happened.

Here are a few sources of “Proof” that you should ask your company for.

Index Annuity Proof – If you are looking into index annuities with income riders, ask your company to run a comparison report from Annuity Rate Watch. Most of our annuity specialists have access to run quotes from their organization. They will rank 150 index annuities with income riders and show you which products guarantee the most retirement income. Bonus tip – Ask them to run the report showing ALL of the carriers on their platform.  Some companies will only show the companies they can sell. Ask them to run the report showing all of the companies, not a preselected list.  Request an index annuity quote.

Fixed Annuity & Multiple-Year Guarantee Annuity Proof – We suggest you use our database to find the best-fixed annuity rates. We have over 40 companies listed, and you can access all of the important vital without a salesperson. You can also apply online if you find a product you are interested in. Get the highest rates.

Income Annuity Proof – If you are interested in income annuities, you should get quotes from a company with access to Cannex Financial. They have been the leader for income annuity quoting for decades. The quote is guaranteed to be accurate from the carrier. You can request an income now, and an income later from us.

Variable Annuity ProofMorningstar has the best variable annuity tool in the industry. It’s tougher to find companies that have access to this tool, unfortunately. If you are looking at variable annuities, ask your advisor if they can run reports from Morningstar’s system.


If They Don’t Want To Sell You What You Want, Move On

Most companies do not get excited to sell MYGAs, SPIAs, or DIAs because they pay the lowest commission rates.

If you are interested in fixed annuities (MYGAs), you should consider working with us directly.

We will be more than happy to earn your business.

When companies don’t want to sell you a product, they will usually give you an excuse why.

For example, I tried to get my bank to send me fixed annuity rate information last month, but they refused.


Because he probably made virtually nothing by selling a fixed annuity. He was VERY eager to discuss index and variable annuities, though.

He said, “Why do you want those low rates? Everyone goes for these other options.”

He did this to redirect the conversation to products that paid him the most.

Also, companies might want to sell you the longest-term products. Again, move on if they are unwilling to offer products that fit your requirements.

You Are NOT Buying What An Agent Says, You Are Buying The Contract

What an insurance agent tells you is practically meaningless.

You are buying the contractual reality, as a friend of mine likes to say.

This is why doing your homework and knowing what you are buying is crucial.

Don’t Make A Move Until You Feel Comfortable

You should not make a move and invest until you feel comfortable in the products.

There is literally never a reason why you need to invest today.

It’s not easy being an insurance agent or financial advisor. They have bills and are trying to make a living just like you are.

Having said that, you should never feel any pressure. Look for a company that you feel comfortable with.

Listen to your gut, but also make sure to do your homework and know the details.

Know the critical details

Here are the most essential details of a contract in our opinion.

How long is the money locked up for? When can you take it ALL out?

What type of annuity is it?

Are there any fees? How often are they charged?  Are there any hidden fees?

Is the return guaranteed? If not, how is it calculated?

What is the surrender schedule or penalties for early withdrawals?

Is there a market value adjustment?

What is the free-look period?

Is the product best in class? Any proof of this?

What is the rating of the insurance company?

What are the withdrawal options? If any? How much can you take out without penalty?

Don’t put too much of your assets into an annuity

As a general rule, insurance companies don’t want you to invest over 50% of your liquid assets into an annuity.

Consider what percentage of your total assets would be invested.

If someone is trying to get you to invest most of your money into one company or product, run. They are usually doing this because it is good for them, not you.

Diversify, Diversify, Diversify

In real estate, people like to say, “Location, location, location.”

When it comes to finances, you can say, “Diversify, diversify, diversify.”

Here are a few ways to diversify your annuity purchase.

Diversify by company.  If you have $500,000 to invest in annuities. Why not diversify the money into 2 or 3 companies? This helps reduce your company-specific risk.

Diversify by annuity type – You can also diversify between annuity types. You don’t need to invest all of your assets into one annuity type.  One alternative is to spread it around. For example, you could mix a shorter-term MYGA with a longer-term index annuity.

Diversify by crediting method – If you are investing in index annuities, you should consider diversifying your investment by crediting method. This is because they do well in different market conditions.  Spreading it around helps average out your return.

Diversify by index – If you are purchasing an index annuity, you can diversify by index.

Diversify by month of purchase – With index annuities, you don’t want all of your contracts maturing at the same time of the year.  One way to do this is to buy a few different contracts are different times of the year. This will help your gains be locked in at various times during the year.

Diversify by guarantees – There is nothing that says you can not own both guaranteed and non-guaranteed options.  You can own a fixed annuity (MYGA) and index annuity at the same time.


Have A Realistic Expectation

If you are purchasing a non-guaranteed annuity, you want to have a realistic expectation, so you are not surprised later.

For example, you might earn 12% one year with index annuities but absolutely nothing 2 years after.

4% is not bad, considering you didn’t have downside risk.

Having realistic expectations will help you reduce stress and enjoy your life.

Ask The Hard Questions

If a company is selling you an annuity, dare to ask them the hard questions.

What is your commission on this?

Is this the street level commission, or do you earn more?

Do you have an approved list of products you can sell?

How many fixed annuities can you sell?

What type of service do you provide to your clients after the free-look period is up?

Does someone have a radio show? Ask them if they are under contract only to sell certain products to show listeners?

How many companies are you appointed with? Hint, if they are only appointed with 3-4 companies, they primarily sell those.

Bonus Tip!

Be very careful with the return assumptions from proposals companies send you.

Proposals looked very good in 2000 and didn’t come anywhere close to that in 2010.

A well-known annuity expert has repeatedly said they have never seen a proposal come