Pricing of FIAs and IULs in this Volatile Time
How to Continue to Make Sales in a Virtual Environment
Webinar March 26 at 1:00 P.M. Eastern
Click on the following link to attend this important webinar:
How the Corona Meltdown Affects FIA & IUL Pricing & VC Indexes (webinar)
To say that we are going through a unique time in history would be an understatement. When the stock market tanks, usually there is a flight to safety where investors can get a modest ROR. AGG (the US Aggregate Bond ETF) usually does well when the stock market goes down.
In 2008, SPY was down 37% and AGG was up 5.24%.
In 2000, SPY was down 9.11% and AGG was up 11.63%.
However, last week AGG moved in lockstep with the market and AGG fell 4% in one day (which is insane for AGG).
The 10-Year Treasury-this is the indicator that needs to be watched when we look at how fixed products (Fixed Indexed Annuities (FIAs) and Indexed Universal Life (IUL)) will act. Back in the late 1990s, caps on FIAs that used the SPY were north of 10%. More recently, caps have been in the 4-7% range. Participation rates that were as high as 80% have been more like 40-50%.
On March 9, 2020, the 10-Year Treasury yield sunk to .54%. This freaked everyone out. The average 10-year Treasury yield for 2019 was 2.14%, and 2.91% in 2018. On March 18, 2020, the yield bounced back to 1.18%, but if yields stay low, this will affect caps and participation rates of fixed products.
Volatility Control Indexes (VCIs)-these are the tools that many insurance companies are turning to in an attempt to boost yields (returns) in FIAs and IULs. Most advisors know nothing or very little about VCIs which is why I presented my 16-page VCI White Paper. Click on the following link to download the paper http://strategicmp.net/vci-white-paper.
How will insurance companies deal with whatever comes next?
In the upcoming webinar, we will have a home office expert from one of the largest insurance companies in the industry that specializes in FIAs and IULs. He will explain the challenges insurance companies are facing and how different companies will tackle the issues in different ways.
He will explain how FIAs and IULs are priced. It’s amazing, but many advisors selling these products don’t know how they are priced and, of course, those who don’t sell them have no idea. This part of the webinar alone is worth attending.
Virtual IMOs-most IMOs are NOT virtual. They have big offices with lots of staff milling around. The IMO I work with on life insurance has had a virtual office setting for years and so the Coronavirus has had no effect on their ability to conduct business. The owner of that IMO will be on the webinar explaining how their virtual office helps them conduct business while other IMOs struggle.
In the webinar, we will also touch on how you can start the process of implementing a virtual sales process with clients.
Many clients will be senior clients who can get online but are not tech-savvy. It’s important for you to know the systems that are available that make it super easy for a senior to get online and do a screen share.
Additionally, there are a number of online education and marketing tools you can use to educate and motivate clients to do business with you.
For now, the world seems to have changed dramatically and advisors need to be up to speed on how that will affect the products they are selling and their ability to continue to make sales.
As such, we hope you find time to join us for what should be a very enlightening and helpful webinar (it will be RECORDED so if you can’t make it live, sign up anyway and you’ll get access to it after the fact).
Roccy DeFrancesco, JD