By Linda Koco
Two men were talking. One complained to the other about how an operating system upgrade made various add-ons no longer operable.
That’s an old problem in the ever-new field of automation. But what about insurance products? When the new versions come out, what happens to the people who go with the upgrade?
It’s a question that has dogged product pros for years.
As discussed before in this space, implementing and keeping up with upgrades can be daunting–not just for the carriers but also for advisors and others in distribution. It invites confusion and sometimes error. Some call it upgrade hell.
That is not the only challenge with financial product upgrades, however.
Many newer products are requiring agents and customers to adopt a whole new mindset. People can’t just “rotor over” from version two to version three and expect three to be “just like two only better.” Version three may have new pricing, riders, death benefit features, liquidity arrangements and so on. It may entail more and/or deeper use of web services. It may have higher or lower limits. These can be client-friendly changes, but they may still require adjustments in the client’s planning. That means expectations sometimes need to change.
The fast-moving field of retirement income products provides a case in point.
In recent years, there have been so many enhancements in the retirement income world that advisors can no longer rely solely on the old standby product solutions–fixed immediate annuities, standard annuitization options, policy loans, partial withdrawals, penalty-free outs and systematic withdrawal. Now there are broader, more varied and sometimes more innovative options, so advisors need to reshape strategy and expectations. Consider:
Broader: In addition to the above insurance products, many advisors now routinely incorporate allied products into the income projections–IRAs, Keoghs, 401(k)s, index contracts, long term care policies, critical illness policies, return of premium options, life settlements and so on. Increasingly, their plans also factor in the client’s health, dental and pharmaceutical plans, as well as auto, homeowners, personal liability and business insurance coverages.
Upgrades in all of these can have significant impact on plan projections.