Is a RILA right for your client? Answer these 5 questions.
A registered index-linked annuity, or RILA, is a breakthrough financial product that’s become increasingly popular with accumulation-oriented investors. Also known as buffered annuities, structured annuities or indexed variable annuities, RILAs offer attractive growth potential while providing a level of 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 five questions can help you narrow the field.
- What’s 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’t always found in the highest rate. When comparing rates, it’s important to consider the potential of the crediting method as a whole.
For example, 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 – sometimes greater than 100 percent - works as a multiplier on any increase in the index.
- Does the product offer flexible features and benefits?
The old saying “variety is the spice of life” holds true for annuities. Just as your client’s financial goals can change over time, so can their tolerance for risk. With so many RILA options available, it’s important to offer a product that is flexible enough to adapt to evolving needs. Here are a few things to look for:
- Diversified index options: Indices that perform differently in a variety of market environments enable clients to diversify for the highest potential return
- A choice of protection levels: Different ways to help balance risk and reward
- Multiple term periods: Both short and long-term crediting strategies offer unique benefits
- Liquidity features: Free withdrawals, a death benefit and confinement and terminal illness waivers add flexibility to a RILA
- What makes this 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 “bells and whistles,” the best of these methods are designed to adapt to economic conditions, relieving clients of the burden of trying to time the market.
- Is the company a quality carrier?
The strength and stability of a carrier is critical when selecting a product, 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 meet the challenges of today’s marketplace, give your clients confidence and help you build your business.
- Will the company provide the support needed throughout the sales process?
The relationship between 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 includes but is not limited to:
- Before the sale: Product training, education and forward-thinking thought leadership
- During the sale: Dedicated sales support, established new business processes and well-designed materials
- After the sale: Exceptional customer service, expedient commissions process and strong claims paying abilities
A registered index-linked annuity may be a great addition to a client’s 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 – a company like Athene Annuity and Life Company. Visit our website to find out more.
This information is brought to you by Athene — where innovative annuity solutions and unique interest crediting strategies are powered by unconventional thinking.
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.