Increasing Your Annuity Sales – Education and Awareness Are the Keys
By Harry N. Stout of the FinancialVerse
Americans received a very loud financial wakeup call from the pandemic. People have now gotten first hand exposure to the reality that their governments cannot be the insurer or funding source of last resort for their key financial needs including health needs, food security and unemployment compensation. Government resources at all levels are stretched more so than at any time since World War II. At the same time, the political process in our country moves to the beat of its own drummer and has clearly shown that consumers need to be able to provide for themselves in difficult times. Financial self-reliance is more important than ever.
The Protection Realization
Seeing this, consumers are beginning to realize that unplanned financial bumps in the road actually happen and that they need their own sources of cash to help them absorb the shocks when they occur. We have seen more people apply for life insurance protection, pay down their debts and look to replenish their emergency funds. They have learned a generational lesson about financial protection. As a result, many households are also resetting their financial values and goals.This makes it a great time to talk to people about the lifelong benefits of annuities. Annuities are a product most people do not understand or have unfounded views about.
These changing financial values and goals are taking place against a background of widespread financial illiteracy. In our country we require more education to drive a vehicle than we do to train people on the basics of personal finance. We see from survey after survey that (1) Consumers have little time for money matters (about 2 and one half minutes per day) and (2) Consumers have very low levels of financial knowledge, particularly for annuities, at all ages. These facts scream out that financial education and annuity awareness are needed.
Why Consumers Don’t Buy Annuities
Each year LIMRA publishes the Insurance Barometer Study which I eagerly read. The Study clearly tells financial professionals the keys to improving their annuity sales. The 2020 Study, published in May, details the key reasons why consumers don’t purchase annuity products on page 31.
The top reasons are:
- Have other financial priorities -72%
- It is too expensive – 65%
- Unsure of how much/what type to buy – 63%
- Don't understand annuities – 62%
- Don't feel I need an annuity – 56%
- Haven't gotten around to it – 48%
- No one has approached me – 47%
- Do not trust insurance companies – 40%
- Do not trust insurance agents – 40%
As you can plainly see the bulk of the reasons consumers don’t seek out annuity product solutions is that they do not fully understand the products. These concerns can be overcome with targeted efforts aimed at improving product awareness, product costs and knowledge of the core product value proposition.
Actions You Can Take
Here are some suggestions of things you can do to champion these much needed efforts.
- Offer virtual financial education events
- Be the source of truth and integrity
- Sell annuities by explaining what they are – insurance products
- Sell the protections and guarantees of annuity products
- Perform annual virtual check-ups for clients
- Focus on raising financial risk awareness
- Offer combination annuity products to help address risks such as long-term care protection
- Focus on building life-long relationships, not transactions.
The industry can grow annuity sales despite the current interest rate environment. Annuities, properly used as a tool, provide financial peace of mind and security. Consumers really need to understand the key features and benefits these products bring to improving their financial lives. We all need to help them cut through the noise to get at the value proposition for annuity products and that they are a valuable tool that can be used to reduce financial risk and improve financial security.
About the Author
Harry N. Stout is author of the forthcoming book Today’s Annuity Products – A Tool To Create Protected Lifetime Income to be published in December 2020. He is a published author and over 20 year annuity industry veteran. You can learn more about his work at financialverse.com.