What to Sell in a Low Interest Rate

Environment

My Old Pappy use to say

“If you live by the rate, you die by the rate.”

Economic Situation

• Leimberg– Get ready for a decade of slow growth and struggle for most Americans. I do see a

recovery, but a weak one at best. And, it's painted against a backdrop of major social and economic crises that include national healthcare and the funding of Medicare and Social Security. Add in a private pension system that is straining, public pensions that are vastly underfunded, and the retirement of huge numbers of Baby Boomers. All told, many of us are facing another "lost decade," where just keeping your head above water may be called success.

• Fox Business:– UBS Bank cutting its year-end earnings per share forecast for the S&P 500 Index by

6%, citing sluggish economic growth in the U.S.

Current Average Rates

• BankRate.com–5 yr CD: 1.71%–Money Market Account 10K+: 0.85%–5 yr Treasury Bond 1.47%

Fixed Annuities

What I’ve heard from Agents:

Traditional and Multi-year guaranteed annuities’ rates are just too low for me to sell today and variable annuities are too risky.

Is this what you feel like doing?

What Does CD Stand for?

Certificate of Depreciation

What should I be selling in

today’s low interest rate environment?

Index Annuities: What makes them so special?

• All the great benefits of a traditional annuity • Potential market growth • Minimum guarantee • Options for client- multiple index strategies• Annual reset

The POWER of Annual Reset

Graph provided by Allianz Insurance Company of North America

Are they worth it?

• Minimum Guarantee same as traditional fixed• Potential upswing of market growth• Utilize Fixed Strategy

Don’t Trust Me…Wharton Study: Real World Index Annuity Returns

October 5, 2009

“Index annuities have been producing returns since the first one was purchased on February 15, 1995…. What we show below are actual results…The results are what they are.”

“These Results are based on copies of actual customer statements…”

Real-world 5-Year Returns

“The next data set reflects the actual real-world total five-year returns credited to annuity owners for an annual point-to-point with cap structured index annuity assuming an annuity is purchased on the 21st of every month beginning April 1996 with a final purchase on December 2003… The chart below compares the FIA returns with the total returns of the S&P 500 over the same period, and a blended return composed of 50% of the S&P 500 total return and 50% of the compounded return for a series of one-year, U.S. constant maturity T-bills. We have not deducted from these alternative portfolios any of the annual expense that typify mutual funds, thereby biasing the comparison to favor mutual funds.”

“[The] index annuity results bested the S&P 500 alone 66% of the time and a 50/50 mix of one-year Treasury Bills and the S&P 500 80% of the time.”

Index Annuity Recap

• All the great benefits of a traditional annuity • Potential market growth • Minimum guarantee • Annual reset • Options for client- multiple index strategies• Proven track record

Would Your Clients Buy?

What is this CD Special?

Single Premium Whole Life

The SPWL Cash HOG

A Single Premium Whole Life policy can look and act like an annuity while you are alive and then can transform itself to look and act like life insurance when you die.

Is a MEC a problem?

• Cash Value accumulates tax deferred

• At death proceeds are income tax free

• Withdrawals are taxed on a Last-in/first-out basis (same as annuity)

• Proceeds avoid probate when beneficiary is named

• Has creditor protection in many states

• Owner can control the proceeds from their grave, preventing

beneficiary’s possible misuse.

What an expert has to say…

“Our industry has a product that is underutilized andunderappreciated. It provides many of the benefits ourseniors say they desperately need, yet it is rarelyrecommended by agents. In fact, I speak in placeswhere agents haven’t ever heard of this product. Thismagnificent product is a modified endowmentcontract.”– Van Mueller

Senior Market Advisor published 5/10/2010