Guarantees In Annuities Appeal To Hispanics

“Most Hispanics are very conservative people. It is a cultural thing,” he says. This conservatism coupled with negative press on how variable annuities have been oversold has made the Hispanic market a little cautious about annuities, he continues.

Additionally, he says, annuities can be difficult for consumers to understand and for this reason, education is an integral part of providing annuities to Hispanics.

A lot of large companies are not doing a good job of educating the Hispanic community, he says. The reason, according to Strohmeier, is that there has not been enough effort to make a complex product understandable, particularly to those consumers who are Spanish speaking.

A “cultural disconnect” results when companies try to push a product to clients who do not understand it or who are not offered sufficient customer service, he says. It is the biggest mistake a company can make, Strohmeier adds.

Annuities with features such as death benefits and guarantees, he says, can be a “wonderful story to tell, but I’ve never had a case in which a Hispanic client has called and said ‘I want an annuity.’”

The conservative nature of the Hispanic consumer is attracted by features such as guaranteed minimum income benefits, Strohmeier says. “Guarantees give them peace of mind.”

But, they also come at a cost and that cost must be explained to the client, he adds. Hispanic clients “welcome those guarantees as long as they understand what they are buying.”

Within the Hispanic market, more mature clients prefer fixed annuities and younger clients are more interested in VAs but with guarantees, Strohmeier says.

But, he says, what the whole Hispanic market is really interested in is 1) protecting family; 2) educating family; and 3) retirement.

Annuities certainly can address the dynamics of the Hispanic community, says Juan Job, corporate vice president-marketing management with the agency department of New York Life Insurance Company, New York.

For instance, Job says that Hispanics, and particularly, Latinas, are part of a wave of entrepreneurship and annuities can help these new entrepreneurs plan for retirement.

And because Hispanics are so concerned about their families, annuities can ensure that family members do not outlive their money, Job continues.

Taking a consultative approach in which a producer looks at all the needs of a client is important when considering whether an annuity could be useful to that client, explains Jane Conti, vice president-cultural markets with New York Life’s agency department.

Index annuities are attractive to Hispanics because “there are a lot of first-time risk takers” among them who want guarantees and are leery of market fluctuations.