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Turn Every Annuity Sale Into an LTC Sale (and vice versa)

Š2014 Brokerville 25A Crescent Drive #508 Pleasant Hill, CA 94523 888-893-2990 www.brokerville.com


Why almost every annuity sale is an LTC sale  Average age of an annuity owner is age 65  Average age of LTC insurance buyer is 67  Annuities can be excellent funding vehicles for LTC Prospecting Direct mail has not proven very effective for LTC sales. However, it has worked well with annuities. And who are the largest buyers of annuities? Existing annuity owners! Not only do they buy additional annuities, but they also exchange the annuities that they bought years ago because the new ones have more attractive features. Advertising in senior publications works well for both annuities and LTC, but don’t make the mistake of offering a free appointment. People won’t respond. Instead, offer a free educational booklet (see sample at http://www.nfcom.com/products/booklets). Seniors like to learn. Therefore, by giving away something educational, you will allow prospects to get their proficiency up so that they can have an intelligent conversation. And when you follow up by phone after sending the piece, you will already have some “expert” positioning in their mind because your photo and biography were included in the booklet. You will not be perceived as a sales person, but rather as a consultant. Advertising in senior publications does work to get LTC responses. You can offer to provide quotes for LTCI in your ads or the booklet. And of course, you will want to try and deliver the proposal in person. There are going to be cases though when the prospect insists that you mail it. Comply with the request, but schedule a phone appointment to answer questions and explore ways to reduce the prices: “Mrs. Smith, I am sending you a standard quotation. But there are 3 additional ways to reduce the rates. Can we set a time and I’ll explain those on the phone once you have the proposal in your hand?” ©2014 All Rights Reserved Brokerville www.brokerville.com  888-893-2990

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Many advisors have not been successful with seminars on LTCI and annuities because they make them look like sales pitches. A seminar titled “Understanding Long-Term Care Insurance” won’t work. People don’t want to come to a product seminar. You need to make your seminar conceptual. Use something like, “Asset Protection” or “Nine Ways to Cut Your Taxes” and you can show all the different ways to use annuities. The Appointment This is about positioning yourself to make both sales. You will be more successful if: You Ask Lots of Questions Put away the annuity and LTC brochures. Find out how prospects feel about their health and financial future. Ask questions, such as “What are your plans when your health deteriorates?” or “Do you feel nervous that you’ll have to rely on your children?” After they have explained their worries, you should say, “If I had a solution that could dissolve all those concerns, would that be of interest to you?” The worst mistake agents make is jumping into their product pitch too early and talking too darn much. When you make the appointment, ask prospects to bring a copy of their tax return. Tell them that you must understand their financial situation before you can make appropriate recommendations. Information on the tax return will help you sell both annuities and LTC (if you don’t know how to interpret a tax return, get the free download at http://www.nfcom.com/show/taxreturn). Line 52 of the tax return shows you the amount the prospect paid in taxes. This can lead in to an important benefit of owning an annuity. First, ask how the prospect feels about paying income taxes (don’t assume they hate it). Make sure it is a hot button. If it is, you will be set up to ask, “If I could help you cut that in half, how would you enjoy the funds?” Write their answer down to use in your annuity close. Go to Schedule A of the tax return. You’ll want to know if an LTCI premium will be tax deductible because that is a huge selling feature. If it is deductible, you should say, “You know the government is going to share the cost of this with you.” And in case you are not up on the deductibility of LTC premiums, you can download Publication 17 from www.irs.gov. ©2014 All Rights Reserved Brokerville www.brokerville.com  888-893-2990

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Schedule B of the tax return reports interest and dividends paid and will give you an estimate of a prospect’s liquid assets. Why is this important? Because you don’t want to ask for too little. If you know that they have $2 million worth of stocks and have seen big losses over the past three years, you’ll want to ask for a $1 million annuity sale. Why settle for less? For example, if you see interest income of $40,000 and you know that interest accounts barely pay 2%, you know that the prospect has $2 million in CDs or similar accounts A few things, however, don’t show up on a tax return that you’ll want to know about when zeroing in on both the long-term care and annuity sale. Life insurance may not be needed any longer and can be 1035 exchanged into an annuity. Ask if they own any life policies. Annuities that are out of the surrender period can be exchanged without any out-of-pocket costs. Ask if they own any annuities Existing LTCI may not have kept pace with the features offered in newer plans E bonds that are sitting in a safe deposit box could be a funding source for an annuity of LTCI and will not show on the tax return. You Close The Sale That Initiated the Contact The first appointment was about annuities or LTC so proceed to close that sale first. Think about where the money will come from and what size commitment you’re going to ask for. Base this on the information you got from the prospect’s tax return and the answers they gave you on how they feel about their financial situation. The Two Products Work Together Suppose you suggested a LTCI plan, and the prospect balks at the annual premium. You could offer an alternative of paying a lump sum into an immediate annuity that would generate the required premium. Your client will not have to worry about yearly payments, and you’ll have two sales. Or perhaps your prospect doesn’t like the fact that money put into an immediate annuity will not pass to beneficiaries. You can use this as an opportunity to make a larger deferred annuity sale and set it up to pay out ©2014 All Rights Reserved Brokerville www.brokerville.com  888-893-2990

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enough interest to cover the LTCI cost. The client gets LTCI coverage, the beneficiaries get what remains in the annuity, and you make two sales. When You Deliver The Annuity or LTC Policy Use this time to open the conversation for the other sale

For example, if you sold LTCI, you should ask, “By the way, do you know that you are paying more tax than necessary—I noticed it when I looked at your tax return?” And if you are delivering an annuity contract, you can say, “Has your accountant ever mentioned insurance for long-term care? In your tax situation the cost is tax deductible.”

©2014 All Rights Reserved Brokerville www.brokerville.com  888-893-2990

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Turn Every Annuiity Salle Into an LTC Salle (and viice versa) ©2014 Brokerville 25A Crescent Drive #