Over the last 10 years, we have become spoiled by higher rates and caps; so much so that those of us in the insurance industry are now almost embarrassed by what we have to offer. However, we have the best deal on the street right now, especially compared to everything else that is available.
How many of our clients have CDs
that we don’t know about, but they have complained to everyone else about the renewal rate that was offered by their local bank? Over the last 10 years, we have become spoiled by higher rates and caps; so much so that those of us in the insurance industry are now almost embarrassed by what we have to offer. However, we have the best deal on the street
right now, especially compared to everything else that is available.
Let’s take a look at some numbers. Bankrate.com shows a range from 0.25 percent up to 1.15 percent for a 1-year CD. The average, however, is 0.37 percent. Did you catch that? The average is 0.37 percent. Be thankful we’re in the insurance industry. How do you think the local bank branch manager is feeling these days?
After reviewing some annuity products, I discovered the following results. I found a 5-year fixed rate with an “A” rated carrier at 2.9 percent. Also, I found an fixed indexed annuity with an “A+” rated carrier that offered a 5 percent bonus and a fixed rate of 1.6 percent. That’s almost a 7 percent first year yield.
Now, I have read all the articles stating that we have to be careful selling a rate or a cap, and I agree. All I’m saying is we should not feel bad about what we currently have to offer. Everything is relative. Look at it this way; our 2.9 percent rate is almost eight times higher than the current CD average of 0.37 percent and our 7 percent first year yield on an FIA is almost 20 times higher.
Here’s a true story and a perfect example. Recently, an agent told me that a 70-year-old prospect walked into his office and said that he heard from a neighbor that this agent was able to get him a 7 percent or 8 percent
first year return on an annuity. The agent paused for a minute.
The prospect proceeded to tell him that he had been offered 0.75 percent at the bank. The way he figured it, the agent was giving him 10 years of interest in the first year and the gentleman would have to live almost 10 years in order to break even at the bank. Needless to say, the agent made the sale.
Understand that I am not saying that every penny of someone’s nest egg
should be placed into an annuity. However, I do think that your clients have a lot of money invested in CDs and they are unhappy about their return. That is the money we should be getting aggressive with and placing with an insurance company.
So, what is the solution to this situation we all find ourselves in and how do we find all this CD money that is just lying around? The answer might be cliché, but communication is key
. You should be sending a letter or postcard
to your client database at least two times a year, preferably in April and October. If you are not asking the question, how do you expect the find the answer?
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