Incentives Dictate Outcomes

According to Annuity.org*, commissions paid to salespeople for selling annuities range from 1% to 8% of the initial premium. Some annuities also pay the salesperson additional commissions for every year the policy remains in force.   

Meanwhile, InsuranceProBlog.com** states that whole life insurance commissions average 55% of the first-year premium, followed by 1% to 5% of yearly ongoing premiums. 

Typical Commissions by Annuity Type* 

• Single Premium Immediate Annuity: 1% to 3% 

• Multi-Year Guaranteed Annuity (MYGA): 1% to 3% 

• Deferred Income Annuity: 2% to 4% 

• Fixed Index Annuity: 6% to 8% 

Whole Life Insurance Commission Rates** 

• Whole life insurance commission rates typically average about 55% of the base whole life premium in the first year. 

Now, here’s my question: 

Your "advisor" is insurance licensed and receives commissions from the insurance company for selling annuities and cash-value life insurance. 

What is the likelihood that your financial plan will include one (or more) of these products? 

This is why you should only work with an advice-only financial planner.  The advice-only model removes the conflicts of interest associated with product sales and A.U.M. based fees (a.k.a. "forever fees") charged by salespeople. The advice-only model for financial planning empowers clients to be their own best advocate.

*https://www.annuity.org/annuities/fees-and-commissions/ 

**https://theinsuranceproblog.com/life-insurance-commission-a-great-evil-according-to-the-internet/