Economy 101: Do People Really Need Life Insurance Companies at the Moment?

Well, we know that a smidge of common sense influences each individual and family’s financial decision-making. We can spend more when we have more, and we should avoid going into debt for things that aren’t essential (except for homes and vehicles). When there’s extra room in the budget, you might consider that Mickey Mouse vacation. When there’s no extra room in the budget, it’s time to suck in your discretionary spending and do the yardwork instead of paying the kid who lives down the street to do it. We recognize the ebbs and flows in a typical household budget. They are on our mind on a daily basis. While we can make adjustments, we know there’s an underlying need for a plan for the future. That’s why people buy life insurance policies and annuities. They want to put away money for their backup plan. They want to ensure their dependents have a financial cushion to offset the blow of their death. With all these things on people’s minds, we wonder what the economic outlook does to their willingness to sit down and purchase an annuity. In this post, we look at what the Fed said recently about the present economy, of course, with the caveat that annuities are not something consumers need just on a rainy day. Annuities are needed every day!

The Economy is Soft, says the Fed

We looked at a review of the economic outlook for this month, which was based on the Fed’s most recent meeting on May 2 and 3, 2017. “The 12-month change in overall consumer prices was close to the Committee’s longer-run objective of 2 percent in recent months; excluding food and energy, consumer prices declined in March, and the 12-month change in core consumer prices remained somewhat below 2 percent.” The Fed’s report means that, after accounting for inflation, consumers are presently spending less, which is why prices haven’t risen. So, households are holding a tighter grip on discretionary spending, but the Fed didn’t raise interest rates again. You’re drumming your fingers and thinking this could be why not as many consumers are making appointments to purchase annuities this month. Bear in mind that they will come when they’re ready.

What to Expect from Consumers? Meet Them Where They’re At

We recommend that representatives selling annuities take the time to appeal to each consumer’s need to prepare for the future. Try the soft pitch on a consumer getting by in a soft economy. For example, start a first-time annuity purchaser out on a plan that requires a small monthly commitment. It could be the cost of two movie tickets or a carton of cigarettes. This approach could assuage a consumer’s temporary concern about the soft economy but also get him thinking about retirement and how much money will be needed. As a financial product, an annuity could come with an annual guarantee or not. Furthermore, consumers may not know they can take a distribution from an annuity when their cash flow is weak.

There are two things we can count on in life: death and taxes. What’s more, people are always going to require life insurance and annuities regardless of whether the national economic outlook goes up or down. As sellers of annuities, we can meet consumers where they are at and deal with their sense of caution. Help them choose a product with the right terms and visualize its realistic income potential. If they can find an annuity that includes an affordable payment, they will feel prepared for the future, which means that you, their annuity rep, is helping them make a sound financial investment. You want them to feel like they are winners even though an annuity pays off down the road.

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