As we close the year 2020 and the difficult environment it has created, we can all look forward to a bright new day in 2021. While the industry is facing significant headwinds on a number of fronts there are pockets of opportunity.
My experience over the years has taught me if there are challenges, there are always opportunities.
Let’s take a look at where the industry can look to find sales opportunities in the new year.
1. Adjusting Sales Efforts for Low Interest Rates
Rates will likely stay where they are for all of 2021, which will impact product pricing, compensation levels and consumer competitiveness. There is just very little available spread for companies to price certain products.
However, these conditions are making certain product types — MYGAs, buffered annuities and pure protection products, the most competitive, while making other products with stronger guarantees and interest rate sensitivity, such as accumulation-focused life insurance products and fixed indexed annuities, less competitive.
Focusing sales efforts on the competitive products to meet consumer needs looks like the winning ticket to increased sales. Distributor margins may suffer selling certain of these products and business models will need to be adjusted accordingly.
2. Reponding to Rising Income Tax Rates
At some point in 2021 or 2022 the reality that all the pandemic related stimulus and projected spending under the new administration will need to be paid for. In addition, the proposed increase taxation of higher income and asset households will look to be enacted. Higher income tax and estate tax rates should make annuity, qualified products and life insurance more attractive. Selling the tax advantages of these products for longer-term savings and protection goals should yield increased sales.