Try Profiling GMIBs Touted By
By Wyatt Blackmon
In todays competitive and ever changing market, it is important to “profile” the insurance company with which you are considering doing business and also its products.
As you know, to boost distribution and sales, many insurers rely on both internal and external wholesaling forces to accentuate a products positive features.
The process entails a type of profiling. That is, as part of the carriers strategic product marketing process, the ask detailed questions about the agents business. This gives the company a snapshot of what, who and how often the agent is selling.
But it is equally important for agents to do the same thingthat is, ask detailed questions about the carriers products. Here is why.
Agents are solicited daily with claiming “best price,” “highest commission,” or “best living benefit,” to name just a few features. Yet pitches about these features and benefits often overlook the products intrinsic value and can sometimes influence business decisions.
To avoid possible mishap involving a clients investments, you should be asking key questions that define the product options bottom line.
For example: One of the more attractive features with todays variable annuities is the living benefit–specifically the Guaranteed Minimum Income Benefit rider. The GMIB rider, as it is called, guarantees the client a minimum lifetime income level, at a future date, if the option is elected. Typically the upfront guarantee is what sells this benefit.
Several companies attempt to hook you into selling products having this rider by offering an accumulated annual rate of 5%, 6%, or 7%. On the surface, most would say that a higher rate is better than a lower one. This is the logic that some agents fall into.
However, a more educated agent knows the GMIB roll-up percentage is only one of the variables that ultimately affect the VAs minimum guarantee.
Would you believe that 5% could sometimes be better than 6%? In certain cases, it is!
This is because the life expectancy tables, annuitization interest rate and other factors that insurance companies use in determining the annuity purchase rate also affect the amount of benefit payout to your client.
To help you better understand if the product is right for your clients, I recommend profiling the product by asking the wholesaler a number of questions. Sample questions are shown in the box on this page.
The point is, your internal should not only attempt to understand your business and clientele, they should also be expected to see things from your perspective.
They must approach each call with two purposes. The first, of course, is to market the companys annuity offerings. The second, and arguably more important, is to make sure you, as the agent, understand the nuances of how the benefit works and whether your clients need it.
In short, when evaluating products offered by , be sure you truly understand if the product is right for your client. Ask pertinent questions about features and benefits that drive your clients decision.
Just as an insurance companys wholesaler profiles you, be sure that you profile the carriers products. It will no doubt make you a more effective and informed advisor.
Wyatt Blackmon, the annuity sales desk manager for MONY Partners, wrote this for the September 2003 Registered e-Report, NUs electronic letter for registered advisors. It appears here in slightly altered form. MONY Partners is a division of MONY Life Insurance Company, Hartford, Conn. Blackmons e-mail address is [email protected].
Reproduced from National Underwriter Life & Health/Financial Services Edition, December 5, 2003. Copyright 2003 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.