Category: Sales · 4 min read
Rethink How You Position Annuities
on December 17, 2019
on December 17, 2019
Annuities can sometimes be a dirty word. Your prospects and clients may have negative associations with an annuity, from things they’ve read or heard. When they hear you propose an annuity, they immediately think of what they’ve been told.
That negative reaction can derail your meeting and credibility. You haven’t even launched into the benefits, but, all of a sudden, your client isn’t interested anymore. What went wrong? I think it all hinges on how you position annuities. To get beyond any negative impressions, you may have to rethink and reorder your sales process. What if instead of leading with the A-word, you did a little more set up of their overall retirement situation? Setting up the problem before the solution can change the positioning of annuities from a negative to a positive. Here are some tips:
Ask the Income Question
It’s time to rip off the band-aid. Ask your client straight up about their income, how much they have saved, and what they’re going to rely on for their retirement income. This can help you shape the rest of the conversation, and, if you need to, focus on helping them save or put away more for retirement.
Setting up the problem before the solution can change the positioning of annuities from a negative to a positive.
One of the biggest fears retirees have is running out of money.1 In fact, it’s the second-highest global concern (40 percent) after declining health (50 percent).1 Now take that fear and couple it with this: According to the Social Security Administration, on average, men who are 65 will live to age 84 and women who are 65 will live to age 86.5. Plus, one in three 65-year-olds will live past age 90, and one in seven will live past age 95.2 These age averages show that we’re living longer than we used to, thanks to medical advancements and technology. This means that your clients’ retirement savings and income needs to last longer, too.
The fear of running out of money is magnified with the fact that we’re living longer. More life means more need for money. The need for an annuity and a reliable stream of retirement income is becoming even more necessary today.
Bring up Health Care Costs
But that’s not all. Health care is also becoming a problem among retirees. Health care and medical costs have risen so much that a couple that retires at age 65 will pay more than $387,000 in medical costs over the rest of their life.3 Other research estimates that an average 65-year-old woman will have to pay $5,200 for health care costs every year.4
That’s something that needs to be addressed with your clients as they make important financial decisions about their retirement. Yes, long-term care insurance can help, but that may not cut it. The harsh truth is that Medicare doesn’t cover everything. It doesn’t include dental, vision, any hearing conditions, or long-term care. Plus, the services it does cover usually require a deductible, coinsurance, or copayments. Your clients will most likely have to pay for their health care out of their own savings at some point. That’s where an annuity can help and provide an additional income stream to cover medical costs.
It’s no secret that the stock market can be volatile, and some prospects and clients may have experienced losses to their retirement accounts before. They may be at a point in their life where they don’t want to risk any of their retirement income on the stock market. This is another area where an annuity can help alleviate any of their market hesitancy and still provide them with consistent income.
A fixed rate or fixed indexed annuity may be a good fit. As you probably know, fixed rate annuities declare the interest rate in advance and guarantee the rate for one or more years, while fixed index annuities allow you to participate in the market growth, but prevent any losses when the market goes down.
Promote Guaranteed Income for Life
Another positive aspect to focus on is the opportunity to establish guaranteed income for life. Explain to them how rare that reliability and consistency is (there’s only three sources of guaranteed income, after all: Social Security, pensions, and annuities), and how it can help set their retirement up for success.
An annuity is a product, yes, but it’s also a way for your prospect and clients to help make their retirement dreams become a reality. It doesn’t have to have a negative connotation with it. Try these positioning ideas, and see if they make a difference in your annuity conversations.
1. Aegon. “The New Social Contract: Empowering individuals in a transitioning world.” May 20, 2019. https://www.aegon.com/research/reports/annual/aegon-retirement-readiness-survey-2019/
2. Social Security Administration. “Benefits Planner | Life Expectancy.” 2019. https://www.ssa.gov/planners/lifeexpectancy.html
3. Sergeant, Jacqueline. “U.S. Couples Retiring at 65 Will Pay $387K In Medical Costs, Report Says.” Financial Advisor. Jul. 15, 2019. https://www.fa-mag.com/news/a-couple-retiring-this-year-at-65-can-expect-to-pay--387k-in-medical-costs--report-says-50537.html?section=43
4. Vanguard. “Planning for health care costs in retirement. Jun 2018. https://pressroom.vanguard.com/nonindexed/Research-Planning-for-healthcare-costs-in-retirement_061918.pdf
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