Thinking differently about cash accumulation products

“Next time you sit down with a client,” Samuelson adds, “ask yourself, ‘Am I saying things that literally make no sense to this person?’”

Unsustainable: Life insurance sold for tax-favored income

“We as an industry have an obligation that if we want to keep our tax-free status, we have to insure for widows and orphans. What’s happened to life insurance ownership is that we have to figure out how to insure for widows and orphans,” Samuelson says. He also mentions word phrasings that work on whole life messaging to customers. The number one phrasing that resonated the most with high-net-worth clients: “Whole life is a tax-favored asset. Accumulation of cash value and dividends is tax-deferred, and any money you access is genuinely not taxable as income.”

Unsustainable: Life insurance sold for its performance attributes

“For the last 30 years, rates have been falling; portfolio rates on life insurance prices have been better than market interest rates. Life insurance has always outperformed bonds. But if interest rates go up, it’s not going to be another 30 years of falling interest rates. When it comes to the accumulation aspects of our products – it’s easy to say, ‘Take money out of bonds and put it in income. But that is solely the function of a 30-year interest rate environment,” Samuelson says.

“In a rising interest rate environment, our story is not, ‘it’s going to outperform bonds;’ it’s that ‘it’s stable. It’s protection.’ We don’t sell performance; we sell protection, conservatism,” Samuelson adds.

Unsustainable: Agent and broker compensation

“Why would I sell life insurance as a cash accumulation product if I’m taking 60 percent commission?

“What about if we compensated agents on cash accumulation like financial advisors get compensated on managed accounts? Instead of all this casualty in year one, we could go positive in year one – which is an easier sell.”

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