Use Product Guarantees To Build Greater Security

By

In todays uncertain financial world, we hear many stories about the financial “surprises” that can sneak up on people, including those who have tried to prepare for the future.

These include the surprises experienced by retired people who, because their investments have plummeted in todays depressed stock market, must go back to work.

When such surprises happen, its often because people took unnecessary risks that got them into trouble. If they had better information up front and had chosen safer options, the outcome would have been much better.

When it comes to your own clients, you can provide a tremendous service in preventing major surprises from occurring.

The fact is that, as a high-quality trusted financial advisor, you need never have a client face a major surprise related to a product youve sold.

Today more than ever, you have the knowledge, the tools, and the safeguards to help your clients avoid major “surprises” in their later years.

Have you noticed the trend in todays new-generation life and annuity products? The common factor found in many of these new products is guarantees.

This has happened because product designers today recognize that the name of the game is helping clients avoid negative surprises.

In a climate where people are looking for certainty about the future, adopting a “no surprises” policy with your clients is possibly the most valuable service you can provide to them.

When you adopt a “no surprises” policy, you focus on products that have safeguards to ensure your clients goals will be achieved, regardless of changes in the market or other factors.

Obviously, nothing in life can be made completely foolproof, but the newer life and annuity products go a long way toward providing the kind of assurance for which your clients are looking.

Its up to you to identify these products and offer them. In assembling your personal list of “no surprises” products to offer to clients, look for safeguards and guarantees such as these:

Universal Life Insurance: Look for a hybrid product that combines the performance of a modern UL policy with guarantees reminiscent of those in whole life. Its features might include:

  • Ability to guarantee the death benefit to a high age such as 100.
  • A guarantee that if the insured reaches age 100, coverage will continue until an even higher age (such as 120) at no cost.
  • A guarantee that the policy will not lapse for the first several years (such as five), provided the guarantee premium is paidregardless of interest rate changes.
  • Guaranteed policy expenses.
  • Guaranteed ability to accelerate payment of the death benefit for terminal illness.

Term Life Insurance: Here the choices are simple. Look for:

  • A guarantee that both the premium and the death benefit will remain level for a long period, such as 2030 years, to meet the clients specific needs.
  • A guaranteed option to convert, with strong conversion features that include credits of past premiums toward the cost of the new policy.

Annuities: Modern annuity products have many more guarantee choices than in the past. For instance, look for:

  • Interest rates guaranteed for up to 10 years.
  • Ability to guarantee income that cant be outlived.
  • Surrender charges that end when the interest guarantee period ends, as well as the ability to waive all surrender charges if funds are needed for nursing care or terminal illness.
  • Equity-indexed annuities that allow the client to participate in the upside of the market while guaranteeing that the principal can never be lost.
  • Equity-indexed annuities with a guarantee that interest earnings will be locked in annually and be protected against future market fluctuations.

In an uncertain world, no one can be sure what life holds in store. But you can help your clients plan and prepare for lifes uncertainties.

Get to know the new generation of life and annuity products. Choose high-quality offerings with safeguards that will help your clientsand yourest easier. Adopting a “no surprises” policy will be the best thing you can do for your clients.

, LLIF, LUTCF, is vice president and chief marketing officer for Clarica Life Insurance Company–U.S., Fargo, N.D. He can be e-mailed at: daniel.peterson@clarica.com.


Reproduced from National Underwriter Life & Health/Financial Services Edition, July 15, 2002. Copyright 2002 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.