Wednesday, March 4, 2009

151A Lurking Danger to Consumers

Many concerns are circling the outcome of Rule 151A. But perhaps the most dangerous aspect of it all is that it will scare producers away from addressing retirement risks and offering index annuities to retirees and pre-retirees at a time when they are desperately needed.

The Key Role of Insurance Agents in Society
“Insurance is sold, not bought” is a well-known industry saying. Sometimes missed is the underlying meaning of this saying: that insurance agents play a key role in prodding American families to take the key steps necessary to secure their financial futures.

It is no different with retirement security. With the decreasing prevalence of company-provided defined benefit pension plans, individuals and families retiring in the future must rely more on their own savings. Unfortunately, study after study has shown that consumers are not saving enough for their retirement, nor are they making wise choices for how to save or invest their money.

As a result, it is crucially important to our society for insurance agents to be collectively pursuing families and reminding them to take the necessary steps to increase their financial security. One of the most powerful financial tools in an insurance agent’s arsenal is to help accomplish this mission is an index annuity. An index annuity provides a financially safe place for retirees to put their money, and it provides growth that is tax-deferred, that is linked to increases in a market index, and that is protected from decreases in the market index.

If insurance agents shy away from offering index annuities because of Rule 151A, our society will be left more vulnerable because consumers will not have insurance agents urging them as diligently to help make sure their financial futures are bright.

Still, various anti-annuity groups have perpetuated a false belief that insurance agents offering index annuities are predators, especially when their sales practices include free dinner seminars.

Rule 151A has created a toxic atmosphere for insurance agents who wish to offer free dinner seminars to reach out to potential consumers. Again, financial consumers who would otherwise have been helped by the services offered by insurance agents, are hurt by the Rule.

The Way Forward
“The only thing we have to fear is fear itself,” as said by President Roosevelt during his 1933 inaugural address, and he was referring to how the public should respond to the economic conditions of the Great Depression. The same is true for an insurance producer today regarding Rule 151A. Rule 151A has created uncertainty and financial fear even as the insurance industry is attacking Rule 151A in court leaving a possibility that Rule 151A will go away.

But, in the meantime, consumers still need insurance agents working diligently to help them realize their financial needs. Let’s not allow the fear and uncertainty created by rule 151A to distract us from our mission, because that would be a tragedy.

For more on this see the Chris Conklin’s article in Senior Market Advisor.

Share your thoughts by clicking on the “Add Comment” link below.

No comments: