SilverSide Insurance Marketing is always on the lookout for current trends that agents need to stay on top of. A topic we are seeing out there frequently has to do with annuities. They aren?t always easy to write and we know that, which is why we?re giving you 3 of our top items to outline when presenting an annuity!
Legal Reserve Requirements
When it comes to annuities, policy owners are often concerned with the security of their money. ?How can you guarantee that my money is safe?? Well, life companies that comply with the legal reserve requirements established by the state insurance laws are known as Legal Reserve Life Insurance Companies.
Legal Reserve companies had their strongest showing during the Great Depression of 1929-38 when some 9,000 banks suspended operations while 99% of all life insurance in force continued unaffected.
In a financial collapse, the insurance companies would be second only to the U.S. government in staying afloat. This is true because the government has taxing power, and can print money. Reinsurance, acquisitions, and mergers protected virtually all policy owners in the affected companies against personal loss during the depression. While thousands of banks closed across the United States, the insurance companies remained solvent backed up by the Legal Reserve that continues to this day.
While considering the carrier’s rating is important for service and stability, information on the Legal Reserve is crucial to present to your clients and prospects so they know that, historically and legally speaking, their money is safe.
Mutual Funds Versus Annuities
Many prospects may bring up the reality of mutual funds/equities having uncapped returns. We believe that it is important to know, as an agent, how to turn this observation around. A key item to point out is that while mutual funds and other securities may have uncapped returns, the opposite is also true. They could theoretically lose an uncapped amount of money.
A salesperson should also be able to explain that there is a cost to issuing and administrating in both mutual funds and annuities and how costly they may be. Clients need to focus on the net return they can expect. Also, if your client is in or coming up on their retirement, they need to review their asset allocation mix between fixed (limited downside) and variable (unlimited downside) instruments. You can read more about this in our previous blog about volatility.
Know the Benefits
When it comes to the annuity options that you are presenting, you should always know what type of features are key for your prospect?s situation. A majority of fixed annuities have great benefits. They will have items such as guaranteed returns, various crediting strategies, death/illness benefits, income riders, free withdrawals, and annuitization. If you are able to list out what benefits your annuity comes with and how those benefits fit their goals and objectives and affect them in the long run, your clients will be more likely to trust you and thereby trust your judgement.
Creating a trust relationship in your sales is the best way to keep clients coming back and sending referrals. Trust assumes honesty, so always be honest with your clients and find what is best for their situation. Don?t just sell them the contract that?s easiest or that makes you the most money in the short run.
Need More Help? Give Us A Call
SilverSide truly believes that outlining these items in your presentation will increase your closing ratio and create a culture of trust in your sales persona. If you need additional help with your sales techniques, product offering, design ideas, or anything else give us a call at 480.400.7171 or shoot us an email at firstname.lastname@example.org!