This is the year for the accumulation insurance products to regain their throne, the king of retirement planning! That is a bold statement, but at the time I am writing this article, 2016 is off to a very slow start with indexes at low levels. The Wall Street Journal stated, “Investors are approaching 2016 with low expectations after a year of disappointment in everything from U.S. stocks to emerging markets and junk bonds.” Investors are realizing that the bubble is over in the stock market. The Fed’s low interest rate policy reached a point where they were forced to begin the process of raising rates. In regards to insurance products, this return to a more normal interest rate environment is a good thing after the last eight years. Already, Multi-Year Guaranteed Annuity (MYGA) rates have improved and companies who moved to the sidelines are re-introducing products. Let’s focus on which products are exciting for 2016. Here are the most popular products I forecast.
MYGA interest rates will continue to improve, regaining popularity with new features, shorter durations, and increased issue ages. Plus, the return to the marketplace of higher rated carriers.
Single Premium Whole Life (SPWL) is an exploding market offering a guaranteed death benefit and estate benefits. SPWL products with new features for liquidity for emergencies or health needs add to their appeal, along with older issue ages.
Indexed Annuities focusing on accumulation vs. income with attractive bonuses and growth options. Products offer more investment choices, commission payout selections and still offer attractive withdrawal options.
Guaranteed Universal Life or Whole Life, both with new features and flexibility. The move back to cash value build-up is strong. These life policies offer many uses for cash value deferred compensation, pension funding, and withdrawals for health care needs (living benefits). The UL (term to 100) contracts have lost many of the traditional benefits with the focus on low cost. The uses for business life insurance policies to grow tax-deductible dollars for policy owners is strong as the markets recover. Policy owners have always looked for avenues to shelter dollars. In addition to trust and survivorship estate planning, special needs and private savings are needed as your clients face future concerns. The accumulation products mentioned can build high cash value—tax-favored and accessible.
Sales Tip: Take time to explain and communicate these new “living benefits” and withdrawal options. Many times buried in the illustrations, they go unnoticed when comparing plans when cost is the only discussion. The benefits are added at little or no cost and can provide peace of mind with added flexibility.
Sales Tip: The 3.00 percent interest rate time bomb is about to go off! After years of low interest rates and policies dropping to minimum interest guarantees, many policies have been renewing at these contractual levels at 3.00 percent and become liquid. We have millions of MYGA dollars ready to move to higher rates as rates increase. The opportunities are tremendous to reconnect with clients and consumers forced to take a more aggressive position to achieve needed income or growth. We are about to break this 3.00 percent barrier by mid-year.
Act now to be ready to take advantage of this opportunity. As brokers, 2016 looks to be one of the best in recent years for sales in accumulations. If you started your career in selling life products, re-visit their attractive features and investigate the new added living benefits. Look at the new Medicare annuities, SPWL, and pension product areas. Happy sales and here’s to a prosperous 2016!
