In selling fixed annuities, as with any financial product, the messages you convey in advertising and personal conversation are crucial.
“Accurate and reliable advertising promotes consumer confidence in the fixed annuity industry,” says the National Association for Fixed Annuities. It also produces an efficient market with “companies innovating and competing with good price, service and benefits to informed consumers.”
A key element to this end is using the right words when describing the features and benefits of fixed annuities. According to the NAFA white paper, “Advertising and Disclosure Principles for Fixed Annuities,” some words and phrases are so laden with the potential to mislead that it’s best to simply not use them.
Here are some prime examples:
o Don’t use words that lead consumers to believe that an insurer’s financial strength, or lack thereof, is irrelevant because of government guarantees.
o Don’t imply in writing or speech that premiums will disappear unless they absolutely will on a guaranteed basis rather than a projected basis.
o Don’t suggest annuities are similar to bank products, securities, retirement plans or other non-annuity or non-insurance products.
o Don’t say benefits are unavailable to other consumers in the same class, i.e., that they are unique to the individual in question.
o Don’t imply that your product is issued by or affiliated with a government agency.
o Don’t hide the true identity of the insurance providing the annuity, suggesting some other entity is responsible for the benefits provided.
NAFA’s advice is right on the money. Being careful about the words you use goes a long way toward preventing the client misunderstandings that can become complaints and lawsuits. In short, when selling fixed annuities, and every other product in your portfolio), always remember words matter.
For more information about annuity sales compliance, visit NAFA’s education site.