Annuities are presently the source of nearly half of Life companies' premium income. A couple of decades or so ago, the figure was just 11%, according to a recent Life Insurance Management Research Association (LIMRA) study.
No doubt some of your P/C insureds are recent annuity buyers. If they haven't bought annuities through your agency, it's time to identify the most likely prospects and to consider a marketing program aimed at them.
Don't limit annuity buyers to the rich. LIMRA's study revealed that 44% of the annuity buyers were in the $25,000 to $50,000 income range! Even more surprising, 35% were in the $25,000 or lower range. Only 18% of buyers earned more than $50,000 (but of course they could buy larger amounts of annuities).
In effect, the study demonstrates that all insureds, from lower-middle class and up, are annuity prospects.
Annuity buyers aren't much different from Life insurance buyers, LIMRA notes. Age is the most noticeable difference. The median age for annuity buyers is 48, and for Life insurance buyers, 32. As prospects creep closer to retirement, annuities come into greater demand. You could prospect among several basic groups:
- Parents of graduating college students
- Employees receiving 20-year awards (or any higher number) at work, in organizations, or elsewhere
- Life insurance policyholders considering reductions in coverage
- Friends or relatives of retirees
- Contributors to charitable causes-tax advantages are often available to donors who combine contributions to retirement plans
- Owners of any retirement plans, such as IRA, Keogh, 401-K plans, etc.
Another finding of the LIMRA study indicates that Life agents do not write as much of the annuity market as they do the Life market. Although career Life agents write 80% of the Life business (PPGAs, brokers, and others write the rest), career agents wrote only 65% of annuities. Fourteen percent of the annuities were sold by stockbrokers, 11% by PPGAs and brokers, 7% by banks, and 3% by mail and other means. Sales sources of annuities are more splintered than those of Life, indicating that the P/C-connected annuity seller is less likely to find strong allegiances to competitors.
People will buy annuities from a wide range of salespeople. You should be in the forefront, directly or through an associate who is competent in annuities. No one is more ideal for this sale!
You can carve a niche for yourself by concentrating on annuities. Your target market doesn't have to be rich; it can be solidly middle class. Define the best prospect groups, and get your piece of the annuity pie.