Accumulation products are the foundation of many clients’ investment portfolios. I will focus on two product area riders with tremendous growing appeal. In the annuity market, the living benefit rider and in the life insurance market, the accelerated income rider.
The two riders have similarities. Both have taken a traditional life or annuity product and enhanced the benefits to provide living benefits! They are providing tremendous added benefits to improve your clients’ lives in ways we had not served in the past.
We all know of the rising financial needs of our clients as they age. Today, when an individual retires, the cost of living continues to increase due to health insurance, living expenses, taxes, and maintaining their homes. The savings individuals are putting away is at historically low levels. The loss of benefit plans and revisions to reduce benefits in government programs have resulted in income gaps. These gaps have created a need for accumulation products to fill. Insurance companies have developed these riders to solve these problems and supply income to fill these gaps. In respect to our new product riders: regardless of whether they are for life insurance or an annuity these riders fill the gap for clients today, providing access to income while living and increased flexibility.
After family and good health, most clients will agree their biggest concern is to not run out of money and to maintain their standard of living. As an added plus, I find very exciting for consumers today life products that can provide home health care supplemental benefits. In the past, the standard language to trigger benefits was, “confined in a nursing home.” That was very restrictive. How many would actually benefit? The new “accelerated benefit rider” may trigger a payout by simply the inability to perform two or three ADLs, providing benefits when a client can really use them to maintain their ability to stay in their home and enjoy their standard of living as we mentioned. Home health care benefits are an attention getter to begin a discussion with your clients. As producers, we can provide peace-of-mind and access to income options while alive that were not available on products in the past.
In regards to annuities, the living benefit rider creates or allows more flexibility than a 10 percent free withdrawal or standard annuitization features by providing income roll ups and other benefits. SPWL, individual life, or UL contracts with the accelerated income rider will provide access to cash payouts of a portion of the death benefit versus just a policy loan concept.
As brokers and agents we need to do our best to inform clients of these riders and take the time to explain the complexities, even though it is easier to just sell interest rates on annuities or low cost on a life policy. The rider language is complex but can be very beneficial for your clients. Accumulation products will be center stage in 2017 with the focus on these income-producing riders. These are what companies are promoting and the features on which company reps are providing training. I urge you to attend training sessions and learn about these features. The time will be well spent!
