By W. Andrew Unkefer
No, I am not crazy. If you are selling fixed annuities, indexed annuities or any other "safe rate" financial vehicles, keep reading. I speak to hundreds of busy agents each month and thousands per year. Some have already discovered what I am about to share with you.
Do you know the one product you can sell that becomes increasingly more attractive in a low interest rate environment?
This product has been around for years and it may have the easiest sales process you will see in the next 12 months. And even better, many carriers have added substantial benefits, never available before, to this easy-to-sell product.
Let me describe it for you: consider a 65-year old female in decent health. After examining her current situation we see she is highly risk averse and seeks safety and preservation of principal above all else. But, she is extremely disappointed in the prevailing interest rates. Even more, she believes interest rates will languish at historical lows for many years to come. As of Dec. 13, 2011, the best 5-year CD is offering her a rate of 1.98 percent, according to BankRate.com. After taxes (25 percent), it is basically just earning 1.485 percent. Despite this low yield, however, the client does have relative safety in the bank.
Now, let's match the safety mentioned above with a guaranteed return of premium at any time. Talk about liquidity and access; that's just about as good as it can get!
But here’s where it gets interesting. If this client places $100,000 into this product, they can lock in a guaranteed, income-tax free estate value of over $190,000 for their heirs. That's a 90 percent immediate increase from the moment the product is issued.
If you guessed I’m talking about single premium life, you’re correct. But, there are innovative features you need to know about as well.
Many companies have now taken the "indexed approach" for crediting interest on these innovative products. That means that you not only have a guaranteed return of premium, but you can also grow your cash values by indexing the interest credited inside the policy to an external market index like the S&P 500.
So now we are talking about single premium indexed universal life (SPIUL) with outstanding guarantees. Because of the nature of these products, you will see annual indexed crediting caps as high as 8 percent or higher. But wait, there’s even more…
Consider the leverage. Increasing an estate value by 90 percent instantly is no small feat. If this same client decided to stay in the CD at current rates, they would need to grow their money for 43 years just to keep up!
Above-Ground Benefits: “Life insurance for the living.” That's the new story. The traditional problem with life insurance is that the typical owner never gets to experience the benefits. Their beneficiaries do. Several new policies allow access at the most important times of life. For example, if the owner is impaired in 2 of 6 activities of daily living, some plans pay out 24 percent of the death benefit each year for four years. (This money is paid out income-tax-free!)
So in the example mentioned before, it would mean she would have up to $182,400 to cover extra costs over the next 4 years. That's a return the CD could only dream about. It is an increase of more than 82 percent, paid income tax-free, when they need it most.
The leading companies have finally got SPIUL Underwriting down to an 8-10 minute phone interview. You will also be surprised how easy the application process is compared to the modern annuity sale. Things have really changed. You know if the client is approved before you go back to your office.
How can the insurance companies do it?
Return of Premium Guaranteed?
Death Benefit Increase Guaranteed?
Living Benefits Guaranteed?
Higher Indexing Interest Credits?
The pricing on SPIUL is just that much better. Clients tend not to surrender these plans because the benefits are so good.
The LOWER the BETTER!
Here's what so many advisors miss: when interest rates drop, the death benefit doesn't! The top selling SPIULs have the same outstanding guaranteed death benefits they had several years ago. But now, in a low interest rate environment, these products have become dramatically more attractive. When rates are low, you can give clients decades of growth for their heirs OR for their impairments while they are alive.
And the last trump card: these benefits are NOT TAXED by the federal government. In the months ahead, make a move to SPIUL and leverage your client's experience with you. You will be spreading a message unlike any they have heard before.
W. Andrew Unkefer is the president and CEO of Unkefer & Associates, Inc., a national annuity and life insurance marketing firm. The company’s goal is to be the No.1 resource for independent agents in their life and annuity business. He may be reached at 800-523-5851 or firstname.lastname@example.org.
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