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Life Health > Life Insurance

Income for life: Are you delivering the right message?

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Last month’s column on retirement concentrated on the substantial challenge of providing for retirees’ health care costs.  This month is focused on other challenge facing retirees: providing income that lasts as long as they live.

Our industry is uniquely positioned to address the American people’s need for lifetime income.  We have access to the best products that we have ever had to provide solutions for this problem.  But we must let the American people know that our industry can help.  We must do a better job of delivering that message to our prospects and clients.  And we must deliver it quickly.

Successful selling is based on the law of large numbers.  Your goal is to get a certain reply as often as possible.  So I have several questions that I ask everyone.  I ask these questions in interviews, at parties, at dinner, in stores — anywhere I am trying to inspire people to inquire further.  They always do.  Asking these questions will increase your appointments.

First, I ask everyone: “Do you want to be rich, or would you like to absolutely, positively guarantee that you will never be poor?”  Overwhelmingly, people declare that they want the guarantee. 

I follow with this question: “If I can show you a way where, even if you run out of money, you won’t run out of income, would you want to know about it?”  They always say yes. We sell products that can do that!  But most Americans do not know that those products are even available, let alone that we are the only professionals who have access to them.

Second, I developed another question based on an article about baby boomers’ fears.  I ask: “I just read an article that says baby boomers are more afraid of running out of income than they are of dying. Do you feel that way?”  They almost always answer yes.  I continue: “Do you have a strategy that guarantees that you will never run out of income?”  They usually do not.  Then I ask: “Would you be interested in working with me to develop one?” Many people will ask me, “What is the best way to provide retirement income?”  Answers include safe money investments like CDs, money markets and bonds.  Some advisors recommend 60 percent stock and 40 percent bond blends.  Some advisors recommend annuities.  Many advisors recommend cash value life insurance to provide retirement income.  What strategy has the best chance for successful outcomes for our clients?

Professor David Babbel from Wharton School and Professor Craig Merrill of the Marriott School of Management at Brigham Young University published a study titled “Rational Decumulation.”  The study shows that lifetime income annuities are the most efficient way to provide retirement incomes. 

The study determines these annuities require 25 percent to 40 percent less money than any other means to provide the necessary income.  At a minimum, basic living expenses should be covered by these annuities.  Professor Jeffrey Brown, a professor of Finance at the University of Illinois comes to a similar conclusion in his study titled “Lifetime Income Without Social Security.”

Tom Hegna shares two additional studies that agree that annuities are the most efficient and guaranteed method to provide lifetime income in his book, “Pay Checks and Playchecks: Retirement Solutions for Life.”  Please read Tom’s book.  He does all of us a service by providing this important information.

Do not ever forget that we are the only people who have strategies that provide and guarantee lifetime income.  Then, once this important foundation is in place, we can use all of our other tools to really build an amazing retirement for our clients.  

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