Mortality Credits - A Hidden Gem in Annuities
Mortality credits are an unseen goldmine for many retirees that are living well into their 70s and investing in annuities.
The problem is they are often too complex for consumers to fully trust them.
When dealing with retirees that are interested in a lifetime annuity, be sure to help them reach a complete understanding on how mortality credits work.
Using Simple Language Perhaps the most deterring aspect to mortality credits are the words used to explain them.
Nothing makes a consumer feel more comfortable than when you are speaking their language.
So, when educating consumers on mortality credits; be sure to replace some of the intimidating terms with more relaxed lingo.
You can start with changing "mortality credits" to something a little softer like "longevity credits.
" For example Too complex: Insurance companies determine the average estimated life expectancy of your age group and provide an interest rate accordingly.
As time goes by you inherit the interest of other investors that do not live up to their promises.
Vs.
Simple and comprehensible: Rather than the insurance companies profiting from lifetime annuity investors that die early, the surviving investors receive higher interest rates to make up the difference.
That is how longevity credits allow lifetime annuities to gain higher growth than most other investment vehicles around.
Follow Up With Examples Once you have explained the basic concept it is important to provide examples so that they can confirm what they are beginning to understand.
Again, it is important to use easy language and easy numbers for simplicity, and remind them how this feature will directly appeal to them.
"So, if an insurance company signs multiple annuities to investors aged around 75-years-old, it will then calculate a life expectancy for that age group.
Let's say that the company calculates a 5% interest based off of their life expectancy; then those investors are seeing at least 5% interest for life.
However, as time goes by and some of the investors pass away, the insurance company shares the interest of the deceased with the surviving investors.
The surviving annuitants see their interest rates rise to highs that cannot be rivaled by other investment vehicles.
So lifetime annuities recognize age and payout more and more overtime so that you can make the best of your investment for as long as you live.
" Relate it to the consumer's goals Not every consumer is going to be interested in a lifetime annuity, and for some it really just doesn't fit.
But for those who are interested, explaining mortality credits will really help them ease their concerns with how a lifetime annuity will work for them over time.
If your client seems to be especially healthy, it might be appropriate to let them know what they stand to gain as a result of their good health and living long.
Many retirees are interested in the comfort of knowing they cannot outlive their money, it also helps to know that they are not only protected from outliving their nest egg, but that they can also see it grow as time goes on.
The problem is they are often too complex for consumers to fully trust them.
When dealing with retirees that are interested in a lifetime annuity, be sure to help them reach a complete understanding on how mortality credits work.
Using Simple Language Perhaps the most deterring aspect to mortality credits are the words used to explain them.
Nothing makes a consumer feel more comfortable than when you are speaking their language.
So, when educating consumers on mortality credits; be sure to replace some of the intimidating terms with more relaxed lingo.
You can start with changing "mortality credits" to something a little softer like "longevity credits.
" For example Too complex: Insurance companies determine the average estimated life expectancy of your age group and provide an interest rate accordingly.
As time goes by you inherit the interest of other investors that do not live up to their promises.
Vs.
Simple and comprehensible: Rather than the insurance companies profiting from lifetime annuity investors that die early, the surviving investors receive higher interest rates to make up the difference.
That is how longevity credits allow lifetime annuities to gain higher growth than most other investment vehicles around.
Follow Up With Examples Once you have explained the basic concept it is important to provide examples so that they can confirm what they are beginning to understand.
Again, it is important to use easy language and easy numbers for simplicity, and remind them how this feature will directly appeal to them.
"So, if an insurance company signs multiple annuities to investors aged around 75-years-old, it will then calculate a life expectancy for that age group.
Let's say that the company calculates a 5% interest based off of their life expectancy; then those investors are seeing at least 5% interest for life.
However, as time goes by and some of the investors pass away, the insurance company shares the interest of the deceased with the surviving investors.
The surviving annuitants see their interest rates rise to highs that cannot be rivaled by other investment vehicles.
So lifetime annuities recognize age and payout more and more overtime so that you can make the best of your investment for as long as you live.
" Relate it to the consumer's goals Not every consumer is going to be interested in a lifetime annuity, and for some it really just doesn't fit.
But for those who are interested, explaining mortality credits will really help them ease their concerns with how a lifetime annuity will work for them over time.
If your client seems to be especially healthy, it might be appropriate to let them know what they stand to gain as a result of their good health and living long.
Many retirees are interested in the comfort of knowing they cannot outlive their money, it also helps to know that they are not only protected from outliving their nest egg, but that they can also see it grow as time goes on.
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