Unlocking Hidden Value: How Smart Advisors Turn In-Force Annuities into Client-Centered Solutions
Here’s the uncomfortable truth: Your in-force annuity book might be full of missed opportunities. Contracts that were cutting-edge a decade ago may now be underperforming, paying for features your clients don’t need, or tied to outdated indexes and poor crediting rates. The good news? Reviewing these contracts isn’t just housekeeping—it’s a powerful way to deliver real value, strengthen relationships, and elevate your practice.
Why Now? The Market Has Changed—Have Your Clients’ Annuities?
Interest rates have shifted, product innovation has exploded, and client needs evolve. Yet, many annuities languish untouched, even as they near term-end or lose relevance. Advisors who proactively review these contracts can:
Identify annuities with outdated rates, caps, or participation rates.
Flag contracts burdened with unneeded riders or features adding cost without value.
Spot maturing annuities ripe for repositioning or replacement.
In today’s market, where FIAs, RILAs, and LTC hybrids offer compelling solutions, there’s no excuse for letting legacy contracts sit idle.
The Ethical Approach to Replacing or Repurposing
First, let’s set the standard: Replacements and repurposing must always serve the client’s best interest—never your commission objectives. Suitability reviews, cost-benefit analyses, and transparent client conversations aren’t optional—they’re essential.
That said, here’s where smart advisors shine:
1035 exchanges allow you to reposition underperforming annuities tax-free into better-suited products, including LTC hybrids or life insurance solutions.
Repurposing for long-term care planning can fill gaps that traditional LTC policies left behind, especially given rising care costs.
Redirecting idle assets into life insurance with living benefits (critical illness, chronic illness, LTC riders) adds protection without creating new premium outlay.
Actionable Strategies for Your Next Review
Run an annual in-force review—this isn’t a once-and-done task. Build it into your client service model.
Create a checklist: Look at rates, indexes, riders, surrender periods, liquidity options, and alignment with the client’s current plan.
Document everything. Show clients side-by-side comparisons of their current contract vs. proposed alternatives.
Collaborate with specialists—whether it’s tax advisors, estate planners, or LTC experts, a team approach ensures holistic advice.
Data Points to Use
NAIC and LIMRA report growing adoption of 1035 exchanges for annuity-to-LTC hybrid moves.
Hybrid LTC sales now outpace traditional standalone LTC policies, reflecting client demand for multi-purpose products.
Many legacy annuities still credit sub-3% rates—far below what’s available in today’s market for similar risk profiles.
The Big Picture: A Chance to Lead Ethically and Strategically
Too often, in-force annuities are treated as “set it and forget it” assets. But the best advisors know that ongoing vigilance is how we protect client interests and prove our value. By proactively reviewing, replacing where appropriate, and repurposing idle assets, you’re not just selling products—you’re building financial security.
