Many prospects, especially “boomers,” who could greatly benefit from a guaranteed annuity don’t understand why insurance companies offer retirement solutions. This is understandable, after all they are the “401(k) generation,” and the ignorance of the benefits offered by guaranteed annuities, particularly in the mainstream financial press, is overwhelming. Thus, it is often both beneficial and necessary to introduce these prospects to annuities by first using a very simple and effective conversation, aided by a yellow pad or whiteboard, as follows:
Why Annuities? Balance for Today’s Retiree.
“ To understand the core benefit of annuities, and why insurance companies offer retirement solutions, let’s first generally and simply understand the three general sectors in financial services."
The first we’ll call the “securities sector,” which we’ll define as options such as stocks, bonds, mutual funds, and the like.
The second sector we’ll call the “insurance sector,” which we’ll define as guaranteed annuities and permanent life insurance.
Finally, our third sector is the “banks,” defined as Certificates of Deposit and Savings Accounts.
Now let’s examine the general pros and cons of each of these from two important general aspects; upside growth potential for our money, and the risk of loss to our money.
We’ll start with the securities sector. What we like about securities is the upside growth potential; it ranges from low to very high, depending of course upon the specific financial vehicles. Conversely, what we dislike about securities is the risk of loss to our money, which generally ranges from moderate to high.
Now let’s look at the other extreme, the banks. What we like about the bank sector is the lack of risk to our money; our risk of loss ranges from none to none when our money is in a CD or a savings account. Unfortunately, what we dislike about CDs and savings accounts is the lack of any real upside growth potential, it is very low.
Now let’s look at the insurance sector. Guaranteed annuities and permanent life insurance sit in the middle. They offer the protection, that is no risk of loss, that we like from the banks, and offer a low to moderate upside growth potential for our money. I say low to moderate only in relation to securities, but the growth potential is much higher than that available with CDs. With annuities and life insurance, our growth potential, or interest earnings, can be guaranteed or can be linked to the performance of a stock market index, typically up to a limit, but with protection from loss.
Thus, the insurance sector offers you a balance between the extreme risk and reward offered by securities, and the extremely low upside growth potential offered by banks, but with the protection against loss that we like with CDs. If this appeals to you for some of your retirement savings, then our next step is get into more detail about your choices within the insurance sector and guaranteed annuities.”
Jonathan C. Illig, Executive Sales Consultant at Brokers Alliance, is an 18 year veteran in annuity sales and support.
Jon may be reached at [email protected]
Brokers Alliance, Inc. has been serving the Brokerage Community in the areas of Life, Annuity, Retirement & Estate Planning, Long Term Care, and Disability Insurance for over 30 years. With 50+ employees, we are devoted to growing your business with superior Marketing Programs, Case Management, and Product expertise. Call Brokers Alliance at (800) 290-7226 or visit us atwww.BrokersAlliance.com