If you are familiar with the insurance industry you are likely aware that there are carriers that create products strictly to illustrate well. This is unfortunate as many times we – as advisors – get caught up in the products with the lowest premiums or the best illustrated Cash Values. However, once these products make their way to the real world, their performance differs substantially for their illustrations.
As a trusted advisor and/or fiduciary for your clients, how can you make sure that you are recommending a product that does not just illustrate, it performs.
At Algren Associates, we take pride in our role as your Brokerage General Agency. This includes vetting hundreds of products from the over fifty carriers we represent to mitigate the impact a product design flaw can have on your clients.
Our vetting includes everything from stress testing products to staying up to date on the carriers that sell them (Financial Strength, Cost of Insurance Increases, Etc.).
In my opinion, stress testing permanent products is one of the most important functions we provide our advisors. We are not content with selling the cheapest or best illustrating product if we believe there may be cause for a client to return to their agent upset in several years.
Here are some of the way we evaluate specific products:
- We will run over half a dozen illustrations on the same sample client. Each illustration will assume poorer and poorer performance. We will then evaluate the impact that performance has on the product’s Cash Value as well as the Death Benefit.
- We pay close attention to the charges and fee structures. We like to know if charges are spread evenly, front loaded, or back loaded.
- We investigate when and how interest/gains are applied to the contract. Is it based on the beginning amount, an average amount, or a final amount?
- We breakdown the guaranteed and non-guaranteed portions of the contract. This can include everything from persistency bonuses to caps and floors.
- We also evaluate the quality of the rider(s) that are offered.
While this can be time consuming work it allows us to feel confident that your client is getting the right contract to fit their needs based on truly objective measures. It also allows us to feel confident when there is competition for a case that we can stand fully behind the decisions that we make when we help you present specific products to your clients.
So, let us Stress today so we can alleviate your stress of tomorrow!