Would it be risky or unadvisable to market directly to replacing existing annuities? My assumption is that both carriers and state DOI's wouldn't be too keen on this so 95% sure this is a no go, but I'm just wondering if there's any way to do it. Literally the easiest marketing I could think of 'hey you already bought and understand this product, let's just switch it now to get you a higher amount of guaranteed income.'
Marketing Annuity Replacements
- Thread starter Jack12345
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- 2,263
The early withdraw penalty could wipe out any additional gain you offer plus it starts the clock all over again.
- 11,277
Maturing annuities... yes.
But in the land of California... where they arrest annuity agents (yet can't make the convictions stick)... I wouldn't go down that path myself.
Now, that doesn't mean you can't do a replacement with surrender charges... if you can document how well it makes the client better off... but I wouldn't MARKET it. That's a decision to make once you're talking with a client, not marketing to get their attention.
But in the land of California... where they arrest annuity agents (yet can't make the convictions stick)... I wouldn't go down that path myself.
Now, that doesn't mean you can't do a replacement with surrender charges... if you can document how well it makes the client better off... but I wouldn't MARKET it. That's a decision to make once you're talking with a client, not marketing to get their attention.
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- Thread starter
- #4
Yup, that was what I was thinking. To clarify, do you think it would still be an issue if they are out of surrender and speaking directly to that. 'If you have an annuity over 10 years old without any surrender charges blah blah...' or would you just steer away from that completely.
- 11,277
That's fair game, as long as you can demonstrate that you can improve their situation, despite entering into a new surrender charge schedule.
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- #6
Maybe a safer way to market would be 'Annuity rates have increased over the past 18 months due to the Federal Reserve raising interest rates (and thus annuity payouts). Annuities purchased from 2008-2015 are paying lower lifetime income than annuities that are purchased today. For some, this could mean an increase in anywhere from 10-20% of lifetime income. Click the link below to take a look at some of the current rates being paid on new annuities...' Do you think this would be okay or still risky? I'm with a pretty small IMO so we don't have a compliance department, where would be the best place to check? Calling up the carriers I submit biz through? State regulators?
- 11,277
Actual annuity interest rates may have very little to do with guaranteed income, particularly with GMWB/GMIB riders. If the cash value in the annuity is lower than the benefit base, that may not be a move to make in the client's best interest.
I wouldn't bother talking with state regulators other than to ensure that your advertisement meets the requirements for disclosures, etc.
If you're trying to market for ONE carrier, you *could* check with that carrier. But if you want to market multiple products, it's not necessary because you just need to stick to a concept and a conversation.
If you were to quote rates, not only would you need every annutiy company's approval, but you'll also need an expiration date and policy form #'s listed at the bottom. Too complex and all you want is to get their attention.
If I were to write a postcard ad of some kind, I'd probably do something along the lines of:
"Increasing interest rates have created new opportunities for annuity values to grow beyond those contracts issued in previous years! While every policyholder's situation is unique, shopping for a new contract may be in your immediate financial best interest!
In one case, we recently helped one policyholder go from earning just 2.5% to 5.2%*!
Can we do the same for you? We'd like to find out!
For a no cost, no obligation conversation, you can reach DHK at (888) 555-0000."
*Not an offer or solicitation. Rates subject to change without notice. Annuity contract guarantees are backed by the claims-paying ability and financial strength of each company.
I wouldn't bother talking with state regulators other than to ensure that your advertisement meets the requirements for disclosures, etc.
If you're trying to market for ONE carrier, you *could* check with that carrier. But if you want to market multiple products, it's not necessary because you just need to stick to a concept and a conversation.
If you were to quote rates, not only would you need every annutiy company's approval, but you'll also need an expiration date and policy form #'s listed at the bottom. Too complex and all you want is to get their attention.
If I were to write a postcard ad of some kind, I'd probably do something along the lines of:
"RISING INTEREST RATES CREATES NEW ANNUITY OPPORTUNITIES!"
"Increasing interest rates have created new opportunities for annuity values to grow beyond those contracts issued in previous years! While every policyholder's situation is unique, shopping for a new contract may be in your immediate financial best interest!
In one case, we recently helped one policyholder go from earning just 2.5% to 5.2%*!
Can we do the same for you? We'd like to find out!
For a no cost, no obligation conversation, you can reach DHK at (888) 555-0000."
*Not an offer or solicitation. Rates subject to change without notice. Annuity contract guarantees are backed by the claims-paying ability and financial strength of each company.
- Thread starter
- #8
All of this is obviously 100% contingent upon being able to prove to suitability departments you are improving client situations. My understanding though is that payouts from lifetime income riders are now higher and is largely due to interest rate fluctuations - is my understanding incorrect?
To be clear, I am only talking about attempting to replace older income annuities with newer ones with higher payout factors and not growth oriented ones.
Carriers will look at the gap between account value and income base as well.
Income factors may have increased, but income base factors are down over the last several years so you may not be able to increase income as much as you think.
Also, several carriers have strict rules like they won't accept anything, no matter how suitable, if there is a certain % left on the surrender. That's an issue on many of these products because those low percentage surrenders are only in the final years of the contract (sometimes never). A lot of this market may only be 5-6 years into a 10 year schedule.
Finally, anyone currently taking income is going to be nearly possible to replace unless they started recently. A 2013 annuity who started taking income in 2018 has probably already reduced their account value by a substantial portion. That is going to be the money that you get to move and even with higher payout factors, it's going to be hard to get there.
Frankly, I would never market this because I don't even know how you'd do it compliantly enough. Maybe complimentary annuity reviews or calling yourself an annuity expert or something but any mention that you're actively looking to do in surrender replacements I could see landing you in hot water.
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- #10
What got me thinking on this line was a recent prospect who purchased an annuity 12 years ago, still hasn't turned on income and we showed an immediate increase in both accumulation and income benefit base value on day 1 (with few % surrender remaining) plus about 18% lifetime income increase. Figured there would be others in similar situations as her but I see that it is a very particular subset of purchasers who would meet the necessary criteria (i.e. very long deferral period and haven't yet turned on income).
