Annuities are a powerful financial tool, yet misconceptions often cause hesitation among clients. As an advisor, addressing these myths head-on can build trust and make annuity conversations more effective. Here’s how to dispel the most common annuity misconceptions and guide clients toward informed decisions.

1. Myth: Annuities Are Too Expensive

Many clients assume annuities come with high fees. While some products include costs for added benefits like lifetime income riders, these costs often reflect the value and protection they provide.

Reality: Annuities are customizable, with options ranging from low-cost solutions to feature-rich contracts tailored to client goals.

Advisor Tip: Focus on the clients’ long-term goals like guaranteed income or tax-deferred growth, to help them understand that the perceived “cost” of an annuity is often an investment in security and peace of mind.

Myth 2: Annuities Lock Up Money Forever

A common concern is that annuities restrict access to funds permanently. While many annuities have surrender periods limited to a set number of years, many allow penalty-free withdrawals within certain limits.

Reality: Clients can choose annuities with flexible withdrawal options and liquidity provisions.

Advisor Tip: Explain strategies like annuity laddering or blending with other assets to maintain a balance between immediate liquidity and long-term stability.

Myth 3: Annuities Are Too Complicated

With various types of annuities available, clients may feel overwhelmed. However, this diversity allows advisors to tailor annuities to different needs.

Reality: Annuities can be simplified by focusing on core benefits: guaranteed income, tax deferral, and market participation.

Advisor Tip: Use clear, client-friendly language and visuals to explain annuity benefits step by step.

Myth 4: Annuities Are Only for Retirement

Many clients believe annuities are exclusively for post-retirement income, but their benefits extend beyond that. For instance, deferred annuities can provide tax-deferred growth and annuities with living benefits or death benefit options can be valuable tools for estate planning.

Reality: Annuities can be used for tax-efficient investing, estate planning, and legacy protection. *

Advisor Tip: Position annuities as a versatile financial solution rather than a retirement-only product to broaden the conversation and address a wider range of client needs.

Myth 5: Annuities Don’t Perform as Well as the Market

Some clients worry that annuities sacrifice growth potential compared to direct market investments. While traditional fixed annuities prioritize stability, variable and indexed annuities provide market-linked returns with downside protection.

Reality: Annuities balance growth potential with security, offering protection against market downturns.

Advisor Tip: Compare annuities with traditional investments to demonstrate their role in a diversified strategy.

Final Thoughts: Turning Myths into Opportunities

Addressing annuity misconceptions directly can transform skepticism into confidence. By providing clear, fact-based guidance, you empower clients to make informed decisions that align with their financial goals.

At New York Life, we make annuities easier—giving you the tools to educate clients and drive meaningful conversations. Let’s help clients see annuities for what they truly are: versatile, secure financial solutions.

*Neither New York Life Insurance Company, nor its agents, provides tax, legal, or accounting advice. Please consult your own tax, legal, or accounting professional before making any decisions.

SMRU 7586471; Expiration 02.04.2028