7 Rules for Selling to Annuity Owners: Rule 3

Rule 3: Target Annuity Owners

Before I discuss how to specifically target current annuity owners, I want to explain the logic behind why you would want to target prospects who already own annuities.

I learned one of my most significant marketing lessons at age 17 while selling Electrolux vacuum cleaners door to door. The daily objective was to find a safe neighborhood, park my car and methodically begin to knock on every single door until I made my 5 demos. The process was simple, but psychologically it was pure hell. I would knock on a door, make a brief introduction and then offer to clean a section of carpet for them at no charge followed by my carefully rehearsed sequence; “what kind of carpet do you have, is it thick or thin?” This was done while showing a thick or thin gesture with your fingers and then pointing past them and redirecting their attention to an imaginary spot on their carpet and authoritatively asking: “do you see that spot right there? – I’m going to take care of that for you right now, at no charge, I’ll be right back!” From there, without making eye contact I would immediately turn around and walk straight to my car (this was called, “making the break”) and grab a brand new machine still in the box and walk back fully expecting to be invited in with my 50lbs of equipment – which worked 80% of the time. Aside from learning closing skills, and developing rejection-proof persistence, I was exposed to a surprising lesson. 

Based on Needs, the number 1 prospect for a new vacuum cleaner based on a needs analysis, would be someone who: 

  1. has carpeting, and 
  2. doesn’t own a vacuum cleaner

Instead, what I discovered was that if someone had never purchased a vacuum cleaner, it was because they either didn’t really care about keeping their carpet clean or since they have managed to get by this far without purchasing one, why should they spend $500 on one now? In other words, they weren’t in the market for a new vacuum cleaner, even though logically they were “wrong” and should have been! 

Based on Wants, the number 1 prospect for a new vacuum cleaner based on results from two years of testing, would be someone who: 

  1. has carpeting, and 
  2. already owns several expensive vacuum cleaners

Shockingly, some of my easiest sales were to people who owned three or four vacuum cleaners. Even more dumbfounding, they would oftentimes trade-in another model that had been purchased within the last year! People that have previously exhibited their willingness to spend money on vacuum cleaners are the best prospects for buying more vacuum cleaners! 

Prospects who currently own annuities have the following characteristics: 

1: Appreciate a safe-money approach to their investments and retirement 

2: Value guarantees 

3: Looking for an income stream

4: Already comfortable with investing with an Insurance Company

By targeting current annuity owners, even if you never replace a current contract, you have already overcome most of the normal objections that you would usually have to deal with when selling annuities to first-time buyers. 

When creating a mailer, use headlines that would cause annuity owners to take a second look, such as: 

The Only 4 Ways to Increase Annuity Income

Annuity Education Series 

Attention Annuity Owners

Annuity Owners, you will learn … 

Here are some proven bullets:

  • Learn 4 New Ways that May Increase Your Annuity Gains up to $200,000 or More, Using Previously Unavailable Strategies.
  • Discover the 3 Hidden Annuity Fees (and where to find them) that May Reduce Your Growth by up to 57% Even During a Bull Market.
  • See Why Most Annuity Income Guarantees Are Ineffective and Learn the Newest Strategy that Generates up to 90% More Lifetime Income. 

You can create hundreds of variations as long as you make sure that your prospect’s attendance at an event wouldn’t make sense unless they already own an annuity or are seriously interested (we call this self-selection). Because the market is so saturated, we have developed special mailers that fill the room with current annuity owners who are ready for “next level” information that you can provide.

I have had a number of attendees ask me how I knew that they had an annuity. The above strategy enables you to attract annuity owners without spending an outrageous sum for a very small annuity owner list. This process has saved our agent’s hundreds of thousands of dollars and has resulted in .75% to 1.25% registration rates, which is far higher than industry-standard. 


If you want to do well, sell people what they need; if you want to get rich, sell people more of what they are already buying.

Annuity owners will keep buying annuities.


AnnuityCheck has developed and provides mailers to its agents for an industry-low 49 cents per mail piece (full-color tri-fold in a window envelope). These mailers are proven to fill the room with 85% annuity owners with the other 15% shopping for one. When attendees register using a promo code, you receive an email and they are tracked in your software and automatically available to print on our custom registration cards.


Click Image to get registered today.



Boost Guaranteed Lifetime Income up to 100K

Michael Lewis, author of “Moneyball,” pointed out at a recent industry conference that “experts make mistakes, and analyzing data can help prevent gut calls that become bad decisions.” The Oakland A’s dissected statistics and analyzed data to identify undervalued players. The process became known as the “Moneyball” method and is now used in all major sports. This same process of identifying and exploiting inefficiencies can be applied to any problem, such as increasing retirement income. The rewards for continuing to defer an income rider payout option is counter-intuitive to the average investor who is used to being rewarded for allowing the magic of compound interest to work over time. It doesn’t help when most of the brochures focus on the compounding of the income account value.

Imagine if you could engineer a $30,000 to $150,000 increase in your total guaranteed lifetime income benefit payments (GLIB rider) and prove it mathematically. The following example will show you how to increase potential lifetime guaranteed income by calculating the Optimum Starting Point to turn on optional income rider payments.

Many advisors know how to sell income benefits riders, but few have taken the time to determine how to maximize the payout based on their client’s individual objectives. This article is going to teach you how to identify the power curve, where you would receive the maximum payout based on your objective. You will also learn how to quickly identify inefficiencies to your maximum benefit.

We will start from the premise that you already own an annuity with an income rider, and you want to generate the largest possible return for the additional charges incurred. I am also going to assume account value is not a primary concern. We will determine the Optimum Starting Point of the income rider to increase the likelihood that your client receives the largest total payout and rate of return by calculating the best time to activate the rider for your specific contract and desired end point.

On the surface, Guaranteed Lifetime Income Riders are designed to provide security from running out of money, in exchange for an additional expense called a rider charge. There is, however, no such thing as a free lunch, and you need to very carefully identify the quid-pro-quo. These riders are designed to create an actuarial profit for the carriers that make them available on their various annuity contracts. It is best if you think of an income rider as an option, but not an obligation to start a minimum withdrawal amount at some point in the future. The brochure may discuss various guaranteed interest “roll-up” rates for the income account, which is called a secondary account feature. This secondary account is only used for calculating income payments and is not to be confused with the accumulation value and can not be removed as a lump sum–so you and your clients need to understand the math. 

Once you own an annuity with an Income Rider, you basically have three options relative to the rider itself:

1: Turn the payments on immediately.
2: Turn the payments on later (defer).  
3: Never turn the payments on (ignore or cancel).

Many agents automatically advise clients to defer as long as possible before turning on an income rider, because the income account is growing at a certain rate of return (such as 6, 7 or 8 percent). This is an overgeneralization that could cost you tens of thousands of dollars, as in our examples below.

The brochure language is designed to get you excited about certain aspects of an annuity that may or may not create value for you. As an example, a certain annuity or rider may double the income account value after a 10 year period, but the actual value/return enjoyed by you is not determined solely by the size of the income account.

Taken individually, income account bonuses, guaranteed roll-up rates up rates, and income account size is meaningless. The carrier could provide 10 percent roll-up and then recapture that “marketing calculation” with a reduced 4.0% payout factor. The only way to cut through the fog is to focus on the factors that are important to calculate the internal rate of return probabilistically.

If we want to view this as a formula, we know the current account value and your age. We can calculate the income payouts from the statement or contract for various income start ages. We can also use probabilities and your health history to select a likely ending point for the income. As long as we use the same calculation summary age for the various income rider start ages, we can determine if there is value to be gained by using a different starting age. We would you determine what survival probability with which you feel most comfortable.

The factors that determine the ultimate value received by you are:

1: Current Account Value
2: Age of Client when they Start Income
3: Amount of Income Payment
4: Rider Charges
5: How Long the You Live and Receives Income
6: Ending Account Value (we are using zero growth for this article because we are only evaluating the income rider portion)

Reasons to Turn It On Now
Since one of the “known knowns” is mortality, I always start with the hypothesis that the earlier you turn on the income rider, the better the odds that you are going to live long enough to receive an amount greater than their principal:

  • If it is a variable annuity and the account is substantially underwater. I have seen IRR’s as high as 9% through age 85 because the account value was substantially underwater.
  • If you are older than 70, have a cap and are paying a fee.
  • The roll-up period is over.
  • You need the income now.

Reason to Turn It On Later (Defer) 
The next step is to determine if there are any significant changes in the rollup values. This is done in order to evaluate whether the payout of deferring is real or imagined when juxtaposed against probable life expectancy and calculation age. A common error is that many of us grew up with a “saver’s mentality,” and feel that the longer they let the income rider compound, the better. The trade-off is that, for every year you increase the size of the payment because of roll-up and payout factors, you are also one year closer to death. By calculating the IRR at your agreed upon life expectancy age, you can quickly determine the Optimal Starting Point for your needs.

To determine the IRR (Internal Rate of Return) at a chosen calculation age, we will need the current account value (not income account), your current age, and the guaranteed income payout for the ages we want to test. So using a sample set of data:

Current Age: 65 (Male) 
Current Account Value: $200,000
Accumulation Growth Assumption: 0%
Rider Charge: 1%
Calculation Age: 85

We determined the payout factors and income below–for each starting age of 65 through 80–in order to determine the sweet spot. The object is to provide the largest possible return through age 85 based on our calculations. The table below was created using payouts calculated at siaincome.com and using annuitycheck.com for IRR calculations. Payout factors will vary widely based on carrier, your age, desired calculation age, and charges.

Total Payouts and IRR through Age 85
Start Age Payout Amount Payout Years Total Value (85) IRR
65 $10,584 20 $211,680 0.61%
66 $11,502 19 $218,538 0.90%
67 $12,495 18 $224,910 1.14%
68 $13,568 17 $230,656 1.32%
69 $14,727 16 $235,632 1.46%
70 $15,981 15 $239,715 1.54%
71 $17,355 14 $242,970 1.59%
72 $18,797 13 $244,361 1.57%
73 $20,376 12 $244,512 1.51%
74 $22,081 11 $242,891 1.40%
75 $23,922 10 $239,220 1.25%
76 $24,328 9 $218,952 0.61%
77 $24,733 8 $197,864 -0.07%
78 $25,139 7 $175,973 -0.80%
79 $25,544 6 $168,857 -1.0%
80 $25,950 5 $167,422 -1.0%

“Income rider deferral is your friend until the end when it bends.”

As long as there are no other factors in the decision, turning on income at age 71 would create the highest IRR in this particular case.  If there were a need for income prior to this date, you could simply take withdrawals. The total payout increase between starting ages of 65 and 71 is $31,290.

Now we will look at the same calculations using age 95 as the calculation age.

Current Age: 65 (Male)

Current Account Value: $200,000
Accumulation Growth Assumption: 0%
Rider Charge: 1%
Calculation Age: 95

Total Payouts and IRR through Age 95
Start Age Payout Amount Payout Years Total Value (95) IRR
65 $10,584 30 $317,520 3.65%
66 $11,502 29 $333,558 3.80%
67 $12,495 28 $349,860 4.01%
68 $13,568 27 $366,226 4.18%
69 $14,727 26 $382,902 4.33%
70 $15,981 25 $399,525 4.45%
71 $17,355 24 $416,520 4.56%
72 $18,797 23 $432,331 4.64%
73 $20,376 22 $448,272 4.70%
74 $22,081 21 $463,701 4.74%
75 $23,922 20 $478.440 4.77%
76 $24,328 19 $462,232 4.42%
77 $24,733 18 $445,194 4.09%
78 $25,139 17 $427,363 3.76%
79 $25,544 16 $408,704 3.44%
80 $25,950 15 $389,250 3.12%

In the example, using age 95 as our target age, turning on income at age 75 would create the highest IRR.  If there were a need for income prior to this date, you could simply take withdrawals. The total payout increase between starting at 70 vs 75 is an additional $78,915. The increase in payouts is hypothetical because mortality is never guaranteed, and you can never calculate the final IRR going forward (such as with a fixed interest rate)–only looking back from the final point. The purpose of the process is to determine Optimum Starting Point based on your perceived ending point.

Turn It Off
In many cases, you won’t want to turn the rider on at all. The following situations may benefit more from systematic withdrawal strategy:

  • You are beyond age 75. It is statistically difficult to benefit from an income rider that has not been activated unless you have a reason to believe that you are going to live substantially beyond normal life expectancy or have a very low accumulation value compared to the income payouts.
  • You have Substandard health concerns.
  • Your income needs are met through other sources (such as pensions).
  • Your objective is leaving maximum for heirs.
  • You are wealthy and want to maximize growth.

Income riders are a great invention, but there are significant pitfalls if you don’t understand how to maximize the payouts. There are definite trade-offs that you need to be able to calculate if you wish to be operating in a true fiduciary capacity.

 While many of the annuities with income riders also have a growth component, we left those out of this exercise because we are focusing on evaluating the income rider Internal Rate of Return, independent of the cash values.



Double Variable to Fixed Annuity Conversions


With variable annuity net assets exceeding $2 trillion at the end of the fourth quarter, there is a very good chance that by simply improving a single factor in your replacement methodology, you could easily generate several hundred thousand dollars of additional annuity premium and AUM. What would happen if you could improve every aspect of evaluating and comparing variable annuity contracts?

Using the process we are going to be teaching in this post, you will be able to quickly take control of any discussion that involves variable annuities. Once you learn how to connect the dots, you will begin operating at a whole new level, professionally and financially.

A little background

Three years ago, an advisor asked me to review several sizable variable annuities belonging to one of his prospects. After reviewing the statements and policies, We calculated that his contract had in excess of 4% combined fees along with enough confusing jargon to choke a horse. After many hours of calculations, we estimated that this particular client will be paying over $629,000 of fees during his remaining life expectancy. The agent that I was working with presented the findings using spreadsheets over multiple client meetings. In between meetings, he (the client) would take what we said and go back to his current advisor for rebuttals. After several weeks of this game, confused, the prospect decided to stay with his variable annuity. Six months later he finally figured out his VA was not in his best interest and moved 1.4 million into an FIA… with the original advisor who sold him the VA with 4% of fees!

“That which hurts instructs” – Ben Franklin


1: We didn’t have a process to show him his previous results

2: We didn’t have a way to show him the impact of his previous fees

3: We didn’t have a way to project his past returns into the future

4: We didn’t have a way to evaluate his income rider performance

5: We didn’t have a way to run a numerical side-by-side showing his options

Frustrated, I resolved to never be involved in another “bloodbath” as a result of not being able to quickly assess a situation based on the facts.

Step 1: Current Returns. You need to be able to join the conversation that is already occurring in your client’s mind. This means you need to determine the real rate of return they have earned since issue. If there have been no withdrawals since the issue date, you can quickly get a snapshot of the internal rate of return using an HP 12-c financial calculator available at OfficeMax for less than $100. Even though I have a software that does this in several seconds, it is valuable to be able to do this calculation by hand at any time.

Steps with HP 12-C:

To calculate the compound annual growth rate when the beginning and ending values are known, follow these steps:

1. Press 0, then PMT.

2. Key in the beginning value, press CHS, and then PV.

3. Key in the ending value, and press FV.

4. Key in the number of periods between the beginning and ending values, and then press n.

5. Press i to calculate the compound annual growth rate.

Step 2: Calculate Fees and Charges. Show the real fees and calculate the impact in a manner that creates instant clarity. The fee and rider charge percentages can be determined with a statement and prospectus. You can then calculate how much is being paid each year in fees. AnnuityCheck™ recently launched Annuity Snapshot, giving you instant access to the fee data on any variable annuity contract in less than 30-seconds. We can determine the gross rate of return, fee percentage, fee dollar amount. 

Step 3: Show fees as a percentage of growth. Showing the fees as a percentage of growth provides a sobering analysis of where most of the growth is being funneled. nd provide the

Step 4: Determine the net IRR. Provide the net return after all expenses and withdrawals. Also, lost opportunity costs as a result of the fees can be calculated.

Step 5: Future Pace. Illustrate the value of their current annuity if the current and past performance continue going forward.  AnnuityCheck allows you, with a single click, to send the snapshot results forward into the illustration tool. This enables you to show the client how well his investment will perform going forward based on results calculated through his current statement date.

Step 6: Compare. Now you can run various scenarios using FIA, other VA or AUM strategies and click our compare button to show the results side-by-side.

you will instantly deliver you and or your prospects three concept pages, using their numbers, that fully illuminate the lethal effect that excess fees have on an individual’s retirement income.

With over 209,953 lines of code and over 440,000 data points, in a few minutes, you can be running client scenario’s on what I consider to be the “Holy Grail” of Variable Annuity fee reversal based marketing and see how to easily convert variable annuity owners into new clients in scale, consistently and reliably.

While many calculations can be completed manually, time is money and time spent running advanced numbers could be better spent communicating with your clients.


Our new Annuity Snapshot makes it easier than ever to generate real-time results using easily available statement information, creating a whole that’s greater than the sum of the parts.


Expose Underperforming Annuities in 30 Seconds

Let’s face it, if you sell annuities or financial products, you are in the replacement business. Your prospects walk into your office with their dollars already invested in a manner that they believed was in their best interest at the time they made the transaction. Before a prospect opens up to a new strategy, you must first convince them that you understand their situation.  To paraphrase Stephen Covey; “seek first to understand, then be understood.”
This Thursday at 10 am PST; we will be teaching the newest methods for breaking down your client’s annuity performance in a way that instantly inspires confidence and results. You can show; annual growth rate, the total fee percentage, dollar amount of fees, fees as a percent of growth, and net growth with five pieces of information available on the front page of any annuity statement.
In this training, you will learn how to quickly expose and destroy all but the very best contracts after several minutes of “reality therapy.” You will take complete control of any meeting regarding annuities and quickly show them information their current advisor didn’t even know existed.
Also, you will learn how 1% turns into 29%, how to provide 20-40% more income without “account-draining” income riders and increase account legacy values by an average of $100,000 per client.
See you on the training.  Register Here: Registration.
P.S. These strategies work with Fixed Annuities, Variable Annuities, and Investment Accounts.

About AnnuityCheck: Technology has revolutionized many aspects of business, perhaps none more so than the financial industry which has gained incredible efficiencies. The new software reduces workloads, increases productivity, and improves accuracy and access to millions of data points.

AnnuityCheck brings those advantages to the cloud, enabling Advisors to benefit from transformative technology and innovation.

AnnuityCheck recently launched Annuity Snapshot, giving our customers access to best-in-class class data on any annuity contract in less than 30-seconds. AnnuityCheck customers taking advantage of this new process will be able to automatically calculate the gross rate of return, fee percentage, fee dollar amount, show fees as a percentage of growth, and provide the net return after all expenses and withdrawals. Also, lost opportunity costs as a result of the fees can be calculated. This lets Agents and Advisors focus on more strategic goals such as helping clients analyze results and make more informed financial decisions.

Our integration also enables our customers to eliminate many tedious, manual processes. Without this kind of capability, many Advisors are forced to enter performance related data into Excel, manually manipulate it, and spend hours trying to get the final results. Our software eliminates this process and the inherent opportunities for errors that manual manipulation brings.

AnnuityCheck strives to provide finance professionals with comprehensive tools to provide crucial calculation processes for prospects and clients in real time. Our new Annuity Snapshot makes it easier than ever to generate real-time results using easily available statement information, creating a whole that’s greater than the sum of the parts.

3 Types of Annuities that you should replace now
3 cringe-worthy results that justify annuity replacement
3% Internal Rate of Return Since Issue
Fees less than 25% of Growth Since Issue
Income rider return greater than 3% ROR at Life Expectancy
Annuities with with lower than a 3% Internal Rate of Return since issue
Annuities where the fees as a percentage of growth exceed 40%
Annuities where the GLIB rider