Case Study – Sales Tactics

How Bad Products are Sold to Good People: There is a clever way to spin information in an annuity contract to make it appear safer, more lucrative and less restrictive than it really is. We need to dive in to this subject so that you can see first- hand just how difficult it can be to deal with some of the people selling annuity products.

One online resource on annuities sends a free booklet when you enter your contact information. Because of their claim to be a trusted, reliable source for information on annuities, we took them at their word and sent away for the booklet. What arrived in the mail was something completely different. As we’re not looking for a libel suit, we won’t name the site here, but almost any Internet search on ‘annuity’ will return this site near the top. It is interesting to note that they claim to be a resource and offer the headline ‘Don’t get Scammed!” The information steered all discussion to a fixed indexed annuity, and then to a specific product.

The book gave just enough background information to appear as a resource, but spun important facts we outline in the Critical Decision Tools in a skewed direction. In fact, we got so riled up we posted a special report on the  “Pros and Cons Of Fixed Index Annuities ” with more detail on these popular products. Some of the Sales Spin we trudged thru in this ‘Trusted Resource Report’:

The booklet reveres fixed indexed annuities as a ‘no lose’ proposition without mention of other types of annuities on the market.
The booklet states that a long surrender schedule may give you “more contractual benefits.” Absolutely false!!!
The booklet refers to minimum fixed rates of 3% within fixed indexed annuities, yet the product promoted with the booklet, in fine print, offered a paltry 1% minimum. Can you say Bait and Switch???
A guaranteed minimum rate of 1% is laughable. What kind of assurance is that? Especially with a 14 year surrender penalty!

And now for the Straight Talk…

True, Fixed indexed annuities potentially offer returns that match the market while eliminating the potential for loss, but….
The fees on these contracts are substantial and there is no promise of solid returns,
Contractual caps on appreciation and dubious methods of calculating Index Averages further reduce your Yield,
You should expect only 60-70% of the actual market average to be credited to your account, BEFORE fees. With historical averages around 10%, this would leave you with a return of 6-7%. With market volatility, you may also loose or simply just meet the minimum.
Long surrender schedules NEVER provide you with additional contractual benefits!
 The product they promote has a 14 years surrender schedule!!!
 I guarantee you’ll find another use for your money before 14 years has passed.
 Long surrender schedule only benefit the insurance company directly and the agent indirectly.
Ground Rules: You are loaning the insurance company money and they are assessing serious penalties if you want your money back in a reasonable time frame.

These are a few of the concrete examples we found in this free booklet. The ambiguous language in this online booklet makes it hard to call this anything other than a sales pitch. Obviously, during the verification phase, you would find that these guys do not deserve your trust. On another important note, the sales commission paid to the agent is disturbing. If you purchased the annuity promoted in conjunction with this ‘Trusted Resource’ booklet, your ‘trusted agent’ earns an astounding 9% commission.

No wonder the product has such a miserable guarantee and a binding surrender schedule!

The lack of information in combination with the sales pitch tells us that these guys are either idiots or common criminals out to make a quick buck. Honestly, we think they are a little of both. This is specifically why I want each person who reads The Annuity Report to be able to objectively determine why sales tactics like this are dishonest, misleading or just plain ignorant.

No matter how you look at it, it is dangerous to do business with people like that. On a final note, the SEC agrees with our assessment of this kind of sales tactic in a July, 2008 speech on the matter Here: If you are sick of being Sold on junk and like our approach, please Contact Us. We can help you find an Annuity Expert who shares our values and that meets our Criteria.

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