In the recent bull market, life insurance professionals often had to use a bullhorn to communicate the need for protection features in investment products.
The deafening noise from a seemingly endless rise of the stock market had many investors ignoring the call for an overall financial plan that includes both accumulation and protection solutions. “Why pay the extra expense for annuities and variable universal life policies, with their tax-preferred treatment, when I can keep riding the stock market returns to my financial destination?” they argued.
Today, the listening is not quite as selective. Today, the stock market downturn has made many investors realize they need an investment plan that protects them from outliving their income and one that protects their estate in event of unexpected death. Today, investors are willing to hear that annuities are the only way to guarantee income for as long as they live.
Today, clients are willing to learn about diversification in its fullest sense–i.e., investors should not only diversify among investment classes but also establish a diversified financial plan incorporating accumulation, lifelong income, and death-benefit solutions.
That is good news. However, there are still challenges in reaching these investors. Consider: Some of the countrys most educated and successful consumers, when polled in Nationwide Financials 2002 Survey of High-Income Professionals, said that the products best suited to meet their needs are those they least understand.
On the up side, positive impressions of products with protection features, such as income annuities, fixed annuities and whole life insurance, ranked 10% higher than in last years survey.
However, more than 25% of high-income professionals still reported they are not at all knowledgeable about variable universal life insurance, variable annuities, income annuities, or long-term care insurance.