Cut Out The Confusion, And EIA Sales Should Rise, Experts Say

He urged EIA executives to consider whether their mothers could read the policy brochures and contracts. "Its a bad brochure if your mother cant read it. Its a bad application if your mother cant fill it out," he said.

Fisher added that he is not against the product. "I think the EIA is a good deal," he said, noting he bought one himself. "But if I cant sell it, why should I fool with it?"

Steve Phillips, an agent trainer who has been working with EIAs exclusively for the past five-and-a-half years, said he agrees that "were not doing a good job of making it simple."

The product does have a place in the industry, and it does offer agents opportunities for sales, he stressed. Its also an "outstanding" product for consumers, he said, explaining that "it offers upside potential with the safety and security the insurance industry has to offer. There is no downside risk."

In fact, in the products six years of sales, he said, EIAs have become the "fastest-growing new (insurance) product ever." Total in force sales are now over $21 billion, he pointed out.

However, the industry is not getting the product to even more consumers, he suggested, because "were not doing a good job of getting it to the agent."

Specifically, in working with agents, Phillips said he has found agents dont sell EIAs because: 1) they dont get it; 2) they dont know how to sell zero (i.e., a product that may, in some years, not credit equity-linked interest); and 3) they think they cant find EIA clients.

He faulted the EIAs specialized product language for much of the confusion. "Weve taken a great ideathe best of what we doand complicated it with all the terminology that agents cant understand," he contended.

For instance, he said, "agents and clients dont know what a `participation rate is. And, if your agents dont get it, they cant explain to the client why the participation rate can go down."

Furthermore, he said, "I think we goofed up by using the word `equity in the product name. That doesnt set the table for your agents, philosophicallyHow about saying, `its a fixed annuity with a unique way of crediting interest?"

Other suggestions from Phillips included:

–Focus on addressing the clients expectations. "Dont sell off the Blue Mountain chart, for instance. Instead, say the policy will give a better than average chance of having a better than average return over the life of the contract, compared to a traditional fixed annuity."

–Agents can sell the concept of zero, by pointing out that once the policys interest exceeds the guaranteed return, "it cant go back (down) to the guaranteed level." Also, he said, "at zero, you dont risk principle or previous gains credited."

–Agents can find EIA clients by "profiling the clients risk tolerance toward money." EIAs are for clients who want to be able to catch the upside of market growth, but with downside protection, he stressed. "They dont want to sacrifice safety and security." Risk tolerance reviews will help agents find such clients, Phillips suggested. Then, ask the clients if they can stomach some years with a zero or 1% return for the chance of getting a greater return (than traditional fixed annuities) over the life of the contract. "If the answer is yes, the EIA may be for them," he said.

Reproduced from National Underwriter Life & Health/Financial Services Edition, October 1, 2001. Copyright 2001 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.

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