Will IULs replace FIAs? -OPINION
September 8, 2015 by Greg Skogsberg
More and more I am hearing people in my industry talking about how they must increase their Index Universal Life (IUL) sales because Fixed Index Annuities (FIAs) are a dying breed.
Poppycock!
First of all, FIAs aren’t going anywhere. Their sales continue to increase by leaps and bounds, and will continue to do so for a very long time. Will the SEC try to come after them again? Maybe. Will there be action centered around the new ‘uncapped’ crediting methods? Probably. Does this mean the end of FIAs? Most certainly not.
Should you increase your IUL business? I don’t know…are you any good at marketing/selling IUL? If not, then you are talking about changing your entire business model. Are you prepared to do that?
Actually, I selfishly want other marketing companies to transition away from annuity sales. It just eliminates that much more competition–because there will ALWAYS be advisors out there that can sell the heck out of annuities, but can’t seem to be successful selling life insurance of any kind.
Have you ever tried to teach an annuity advisor to become an IUL advisor? I have, and it rarely works. Here’s why; When a client invests in an FIA, it is an intellectual decision. An investment for their own future. When a client invests in an IUL it is an emotional decision–even if there are investment aspects of the IUL that appeal to the client, they are still emotionally deciding to plan for other people’s futures. This is why you rarely meet an advisor who is equally successful with both IUL and FIA sales, because they require two completely different marketing approaches, sales presentations, etc. It’s just too hard for most advisors to try to wear both of those hats.
Then there’s qualifying for life insurance. Since the bulk of people looking to buy IULs or FIAs are over 62, nearly half of them will be eliminated from the IUL purchase by underwriting. Then, half of those remaining already have “enough” life insurance, and are nearly impossible to convince otherwise. Finally, half of the half remaining view life insurance as a ‘forever’ purchase, which is counter to their intuitive investing sensibility, which feels that they will make more money over the long run if they move it from investment to investment.
There are just too many reasons why IULs don’t have a chance of making FIAs a thing of the past. So, keep on selling annuities. They are still the strongest retirement investment vehicles on the planet…in my humble opinion.
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Greg Skogsberg is the President and co-owner of TWH Annuities, Inc., and Index Annuity Marketing Company doing business in all 50 states, with its headquarters in beautiful Anaheim Hills in Southern California.