Kyle Tomko Highlighted in Broker World Magazine

The insurance industry has long been considered a black box, shrouded in secrecy, with endless (negative) connotations around carriers being a scam or even a rip off. Let’s be honest, we’ve all had a bad experience with reporting a claim or dealing with outlandish hold times and or customer service.

Worst part yet, this experience ranges across the insurance landscape and you can often be reminded when you see their name in the airport, on a building, or even on a ballpark/arena. To no surprise, insurance carriers are often misunderstood from the start.

In this article I hope to dispel some of the myths surrounding the annuity industry. My goal is to provide a conceptual explanation around how annuity companies make money. Along the way, we’ll tackle some of the more common questions like, “How does the agent get compensated?” and/or “How does my contract charge no fees?”

These are both reasonable questions for consumers to ask. But first, why exactly are annuities (from fixed to indexed) so popular right now? The answer is two-fold. Continued stock market volatility + Increasing interest rate environment = Annuity Opportunity Zone. Let me explain further.

From a business cycle standpoint our economy is nearing the end of an inflationary cycle, which means we’re headed towards a recessionary period. We’ve seen annuity rates and benefits continue to rise with the Federal Reserve’s rate hikes throughout the past twelve months. When interest rates rise it becomes more expensive to borrow money, which can discourage spending on big ticket items such as an estate, automobile, etc.

At some point the increased interest rates will lead to lower inflation, lower economic growth, and higher unemployment. The government does this with the hope that the demand for consumer goods and services will drop.

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