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Sell Annuity Tax Deferral This Way – Your Prospects Will Understand and They Will Buy

Selling the power of tax deferral is not a new concept. But how you say it can make the difference between a sale and no sale. I have used the concept of double and triple compounding to explain the benefits to prospects, but I have also expanded it to make understanding it simple. Here is how I explain compound interest.

The Power of Compounding and How to Illustrate the Benefits in an Annuity…

The Power of Compounding.”

*A Traditional Investment Account Has Double Compound Interest

Definition: Interest on the Original Principal and Interest on Accrued Interest.

*A Tax Deferred Investment Account Has Triple Compounding Interest

Definition: Interest on Principal, Interest on Interest and Interest on Tax Savings

Who takes advantage or Tax Deferral? Smart Money People, that’s who. This is because tax deferral also provides control when tax liability is selected. Use this term to allow your prospects to better understand the benefits of allowing money to grow in an annuity.

Tax Deferred Is Tax Diminished

Corporate America thrives on tax deferral and anytime taxes can be delayed it is a winner. Anytime you can send a tax liability to the future you will reduce the net out of pocket because the actual tax could be reduced by inflation. By using annuities for the benefit of tax deferral allows the prospect to have more control over the future use of the funds.

Many agents sell “tax deferral” without ever fully understanding how the benefits can be fully utilized. I do so by explaining to my prospect that when the accumulated funds are accessed in the future, they would not be required to refile past tax returns because another huge benefit of tax deferral on annuities is NO RECAPTURE.

When the accumulated interest in an annuity is accessed the tax liability is also accessed. This allows the prospect to have full control over when the tax is paid.

Use the RECAPTURE concept to fully explain this terrific benefit.

Here is the exact language I use.

‘Mrs. Jones, by using tax deferral you will be the one in charge of when this tax liability will be incurred. It could be next year or some other future year. In the meantime, your annuity will provide interest credited to your account but the tax liability will be deferred. Here is something you may not have known. When you access your funds in the future, you will not be required to go back and “recapture” the tax liability. The IRS doesn’t require you pay any back taxes, just the liability of the tax year in which the funds were touched!”

No recapture! I know what you are thinking, this is sort of silly but it really isn’t. One of the great benefits of these products is tax deferral and knowing that the tax liability is totally in their control creates a bountiful selling point.


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