These financial instruments that guarantee a
paycheck, for life, remain THE most attractive
form of retirement safety today.
Keeping it in perspective
The one thing that isn’t going to change throughout this is
the value proposition. Do you know the #1 fear of Americans?
Running-out-of-money in retirement.
Do you know the only single financial services instrument that
can guarantee that someone gets a paycheck, every month for the
rest of their life, even if they live to be 150? An annuity.
Look- you have all been so focused on exactly the wrong
thing about these products. I’ve been waxing until I’m blue in
the face for the past eight years about how everyone needs to
quit preaching the “upside potential” story. It is misleading. It is
disingenuous. Did you know that these ARE fixed annuities? There
IS a limit to the growth on indexed annuities, you know; that
guarantee costs money.
Every indexed annuity product is priced to return 1.00% – 2.00%
more interest than fixed annuities being issued that same day. So,
if fixed annuities are presently earning 2.16%, indexed annuities
sold today are going to earn 3.16% – 4.16% over the life-of-the-
contract; regardless of index, crediting method, or means of
limiting indexed interest. Sure, some years, the prospect may earn
double-digits. Then again, in other years, they’ll earn a big fat
goose egg. However, over a long term it is going to average out to
1.00% – 2.00% more than fixed annuities.
Guarantees for driving sales
Oh, you can’t sell a potential of no more than 4.16%? Sounds
like a performance issue. Because if I am going to keep it real,
Certificates of Deposit (CDs) today are only paying 0.96%. So, that’s
the alternative: a taxable investment paying less than one percent.
You can’t sell against THAT? I think you can. And, let me drop
some knowledge right here — It is the GUARANTEES in annuities,
which drive sales of these products.
Ever notice how when the market gets volatile, sales of fixed
and indexed annuities increase? Guarantees.
Ever notice how companies that have guaranteed rollups on
their GLWB have better election of those riders, as opposed to
their “income riders” with elusive, non-spreadsheetable indexed
gains on the Benefit Base? Guarantees!
Ever notice how prospects ask what happens if the insurance
company “goes under” during your sales process? Gare-uhn-tees.
The fact that these financial instruments that guarantee a
paycheck, for life, remain THE most attractive form of retirement
safety today. Don’t forget it, and your sales won’t falter…despite
how bananas the market is behaving.
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