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Is a RILA right for your client? Answer these 7 questions

A registered index-linked annuity, or RILA, is an insurance product that鈥檚 become increasingly popular with accumulation-oriented investors who are thinking ahead toward retirement. RILAs offer attractive growth potential while providing a level of downside protection from market risk that variable annuities (VAs) may not provide.

But with so many RILA products entering the marketplace, how do you choose the right one for your client? Answering these seven questions can help you narrow the field.

1. With a RILA, what鈥檚 the growth opportunity for my client?

Registered index-linked annuities commonly feature capped indexed interest crediting methods, some advertising cap rates of 200 percent or more. This may look impressive, but the best value for your client isn鈥檛 always found in the highest rate. When comparing rates, it鈥檚 important to consider the potential of the crediting method as a whole.

2. What is participation rate in RILAs? 

Some RILAs offer participation rate methods alongside capped options. While a cap rate allows 100 percent participation in positive index returns up to the cap, a participation rate 鈥� sometimes greater than 100 percent 鈥� works as a multiplier on any increase in the index.

3. Does the product offer flexible features and benefits to help address my client鈥檚 objectives and retirement goals?

The old saying 鈥渧ariety is the spice of life鈥� holds true for annuities, especially RILAs. Just as your client鈥檚 financial goals can change over time, so can their tolerance for risk. With so many RILA options available, it鈥檚 important to offer an insurance product that is flexible enough to adapt to evolving needs. Here are a few things to look for:

• Diversified index options: Index performance differs in a variety of market environments, which enables clients to diversify for the highest potential return
• A choice of downsize protection levels: Different ways to help balance risk and reward. A higher level of protection from downside risk means a lower cap on upside potential, and vice versa.
• Multiple term periods: Both short and long-term crediting strategies offer unique benefits
• Liquidity features: Penalty-free withdrawals, a death benefit and confinement and terminal illness waivers add flexibility to a RILA

4. Is a RILA a structured annuity?

Yes, a RILA is also referred to as a buffered annuity, structured annuity, or indexed variable annuity. 

5. What makes this annuity product stand out?

While RILA products have similar designs, some offer features to help maximize return potential. Custom interest crediting methods are a great example. Far from complicated 鈥渂ells and whistles,鈥� the best of these methods are designed to adapt to economic conditions, helping relieve clients of the burden of trying to time the market.

6. Is the insurance product company a quality carrier?

The strength and stability of a carrier is critical when selecting an annuity, especially one designed for long-term savings. Look for a highly rated carrier with a strong business model, sufficient capital and experienced leadership. The carrier you decide to work with should be able to help meet the challenges of today鈥檚 marketplace, give your clients confidence, and help you build your business.

7. Will the company provide the support needed throughout the sales process?

The relationship among carrier, financial professional, and client is a long-term commitment. The carrier you work with should be able to provide support before, during, and after the sale. This support can include but is not limited to:

• Before the sale: Insurance product training, education and forward-thinking thought leadership you can then leverage to provide thoughtful retirement planning advice to your clients.
• During the sale: Dedicated sales support, established new business processes, and well-designed materials
• After the sale: Exceptional customer service and strong claims-paying abilities

A RILA may be a great addition to a client鈥檚 retirement portfolio, depending on their financial goals and risk tolerance. Before you offer a RILA, be sure to select a company and product that checks all the boxes 鈥� a company like 麻豆传媒. Visit our website to find out more.

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Registered index-linked annuities have a risk of substantial loss of principal and related earnings. They are designed to be a long-term investment product used to help provide income for retirement and are not suitable as a short-term investment. Registered index-linked annuities can only be marketed and sold by securities licensed financial professionals. Any discussion of this product must be preceded or accompanied by the product brochure and prospectus which provides more detailed product information, including all charges or limitations as well as definitions of capitalized terms.

Indexed annuities are not stock market investments and do not directly participate in any stock or equity investments. Market indices may not include dividends paid on the underlying stocks, and therefore may not reflect the total return of the underlying stocks; neither an index nor any market-indexed annuity is comparable to a direct investment in the equity markets.