'Annuity plan! Annuity plan! I do not like that annuity plan, Mr. Insurance Man!'
Sometimes, the most resounding lessons on financial strategy can come from the most unlikely of places.
Case-in-point — a classic bedtime story I read to my daughter struck a perfect correlation to our business.
The story is Dr. Seuss’ classic Green Eggs and Ham.
For those of you who might have forgotten the glorious wonderment that is Dr. Seuss’ story, the tale goes like this:
When the underappreciated protagonist Sam-I-Am offers our main character the opportunity to try green eggs and ham — something new to expand his palate and improve his enjoyment of life, the offering is met with an unequivocal ‘NO!’
Sam-I-Am tries and tries to get the main character to try green eggs and ham — be it ‘in a car’ or ‘in a house’, ‘with a fox’ or ‘with a mouse’, ‘on a boat’ or ‘in a tree’ — he will not try them and asks Sam-I-Am to simply ‘let me be’.
After countless efforts and scenarios, the disagreeable character finally gives in and tries the green eggs and ham. Much to his surprise, he loves it. He realizes that he’s been missing out on something magical and wonderful for quite some time.
I draw a connection to the annuity — a product within our industry that many of you know, use, and love. However, the general public is reluctant to consider it, no matter how hard we try to convince them of its benefits.
Many of your clients may be like the main character in Green Eggs and Ham — not knowing why they don’t like them, but simply resist without ever even trying them.
‘That annuity plan! That annuity plan! I do not like that annuity plan. I do not like them insurance man, I do not like that annuity plan.’
‘I would not like them here or there. I would not like them anywhere.’
‘I will not try one in my house, I would end up in a poorhouse. I will not try one with a fox, I’ll end up living in a box. I will not try one on a boat, around a moat, or with a goat. Talking heads say they are no good, no good you see. Now you go on, just let me be!’
‘Try one! Try one! And you may. Try one and you may, I say.’
Many people are afraid of things of which they are unsure or unaware. They have misconceptions of what an annuity is — and oftentimes, their definition of an annuity is entirely out of date.
Keep in mind that the annuity may not be right for everyone — so we should avoid painting the picture that an annuity is the best answer for every client.
However, with more and more Americans preparing for retirement without pensions and many people having no idea how to replace their paychecks when they retire, the need for guaranteed lifetime income that annuities can offer may be greater than mainstream media would have you believe.
In fact, the math and science behind retirement planning (yes, it exists) tells us you cannot retire properly without one.
In his book Paychecks and Play Checks: Retirement Solutions for Life, Million Dollar Round Table member and financial professional Tom Hegna explains that, “the lifetime income annuity protects against many of the other risks that retirees face,” including inflation, longevity, market risk, and withdrawal rate risk.
When retirees and pre-retirees were asked in a recent study conducted by Allianz Life Insurance Company of North America to describe the top characteristics they would want in a retirement solution, they described annuities without even realizing it:
Top 5 most important characteristics in a retirement solution:
- Stable, predictable retirement standard of living
- Guaranteed income stream for life
- Guaranteed not to lose value
- Protect against market downside
- Don't think about, stable, predictable
• Have a good annuities metaphor of your own to share? Please do so on this new thread: Dr. Suess story similar to why people fear annuities
Next page: Income Allocation strategy
- Political reaction: Republicans propose The American Health Care Act
- State Farm reports $1.2 billion pre-tax operating loss in 2016
- DOL aims for initial 60-day delay in fiduciary rule effective date
- Report aims to put a stop to ‘Use It and Lose It’ homeowner policies
- Most LTCI claims begin and end at home; insurers pay out $8.65 billion in 2016 claims, new data confirms
- 2nd annual ‘Insurance Careers Month’ trumpets fact 93% are proud to work in the industry; rallies recruiting efforts
- MetLife annuity and life products officially rebranded under Brighthouse Financial name
- 2017 health insurance trends: HSAs, wellness incentives and other tactics employers looking at to reduce costs