What is an Annuity Illustration?

A man and woman sitting looking at a tablet screen.

Annuities are a type of financial product issued and backed by insurance carriers. Annuities provide a regular stream of income for a specific time period or for the rest of your life, depending on the product. Most annuities include an investment component.

As with many financial products, it can be hard for buyers to picture how their annuity will perform. This is where illustrations come in.

An annuity illustration is a document that shows the key features of an annuity. It helps you understand how your annuity will perform over time.

In general, illustrations help the buyer make an informed decision. They provide information to help you decide if a given annuity product is the right investment for your financial goals.


What Does an Annuity Illustration Include?

It can vary depending on the annuity product you choose. But, illustrations typically include the following elements.

1. Premium amount: The amount of money you pay to purchase the annuity.

2. Payout options: The different options for how the annuity will pay out, including single life, joint life and period certain.

3. Guaranteed interest rate: The guaranteed minimum interest rate that will be credited to your annuity.

4. Rate of return: The projected rate of return on your annuity based on the investments’ performance.

5. Fees and charges: This can include surrender charges, administrative fees, and mortality and expense charges.

6. Death benefit: The benefit paid to your beneficiaries in the event of your death.


How are Annuity Illustrations Created?

Advisors typically generate illustrations using a digital platform. They collect the needed client information. Then, they produce the illustration for the specific product the client wants. The illustration process can look different depending on the technology used.

Some modern illustration solutions automate as much of the process as possible. This streamlines the sales process. It creates a faster and easier experience for both the advisor and the client. Some platforms even allow advisors to run and compare illustrations for multiple product lines. This helps ensure clients receive the annuity product that is right for them.


Seeing it Come Together

Illustrations may seem to some annuity buyers like a needless detail. But they are vital to the process. Illustrations help you see what you can expect from your annuity. They put all the information right in front of you, making it easier to determine if it is the right product for you.

And thanks to today’s powerful illustration solutions, advisors can create robust illustrations quickly. The process is easier and more precise than it has ever been. This makes annuities more accessible, which is a good thing for everyone.

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