Annuities are insurance contracts that provide annuitants with income benefits. Many retirees rely on these sums as a primary income source. Consequently, annuity marketing strategies are normally focused on people who are close to retirement age. To maximize sales, many insurance firms also concentrate annuity marketing efforts on groups of people such as employees of a particular company rather than soliciting sales from individuals. Laws exist in many countries that govern the manner in which annuities and other insurance products are sold and marketed.
In some nations, annuities are afforded special tax treatment. Generally, this involves the annuitant’s purchase premiums being able to grow on a tax-deferred basis in the same way as a retirement account. Annuity marketing efforts are normally focused on people who still have a reliable source of income, since these individuals are in a position to fund an annuity and realize the tax deferred savings these products provide. Many insurance firms place promotions in industry journals that are commonly read by people who work as attorneys, physicians, accountants or in other highly compensated positions. Printed and broad-casted advertisements normally emphasize the fact that these individuals may be able to maintain their standard current of living during retirement if they purchase an annuity.
Annuities expose the issuer to the danger that large numbers of annuitants may live longer than expected. Insurance companies price products by reviewing historical mortality tables and using this information to estimate average life expectancy rates. The more contracts a firm sells, the more likely the average lifespan of the contract purchasers are to mirror the life expectancy predictions. Therefore, many insurance firms contact major companies and market annuities as pension products. By doing this, annuity issuers are able to sell products to large numbers of people and reduce the statistical danger of the average annuitant living longer than expected.
While many insurance companies target group sales, other the firms conduct direct marketing. Typically, agents from these firms make tele-consulting calls to individuals who live in affluent areas. In many instances, these agents arrange appointments with the call recipients during which the agent reviews the call client's overall financial situation. Annuity products are often recommended as part of an overall financial management plan. Direct annuity marketing can also involve insurance firms sending letters and promotional materials to target clients.
Some annuity products provide investors with a fixed rate of return while others involve a return that is based upon the performance of securities such as stocks and bonds. Some countries have laws designed to prevent agents from misrepresenting these products. Consequently, agents cannot make false promises about the probable returns or the safety of the investment. Annuity marketing materials are normally reviewed by an auditor or attorney to ensure that literature and marketing materials are acceptable under regional or national laws. Companies that do not prescreen marketing materials, often end up having to pay fines which means that poorly prepared advertising campaigns are not cost effective.