InsuranceNewsNet Magazine February 2012 : 34
[ ANNUITY WIRES ] Why Aren’t Annuities On The Menu? In late 2011, 1,000 current-retirees and near-retirees identified several sources of income and financial security for their retirement years, but apparently annuities did not make the list. The telephone survey defined “near-retirees”— boomers age 50 or older — as the very group that the insurance industry considers to be a key mar-ket for annuities. Here is what the researchers found about income source expectations of the near-retirees they interviewed: 62 percent named Social Security as a major retirement income source; 39 percent named 401(k)s; 37 percent named monthly pensions; 34 percent named income from part-time work; and 27 percent named IRAs. Perhaps the researchers did not ask about annuities, or maybe they asked but the answers were not statisti-cally significant. Either way, these findings provide telling insight into the retirement income expectations of near-retirees. Advisors might find the insight useful as they counsel clients about how annuities can help balance out the retirement income plan. Brought to you by: 401(k) plans and IRAs (73 percent each). Both of these figures represent mean-ingful increases over last quarter’s lows (66 percent for 401(k)s and 67 percent for IRAs in Q3).” Connect the dots. bAnks’ fiXed Annuity sAles inch uP, but… genWorth JumPs in the indeXed Annuity ring Genworth Life and Annuity Insurance Company is now a player in the fixed indexed annuity arena. The Richmond, Va., carrier tossed its hat into the ring with a product suite aimed at “security-conscious consum-ers”— those who are “weary of invest-ment volatility and eager to protect their money from unpredictable market fluctuations,” according to Paul Haley, senior vice president-annuity product development. They may be weary but if they buy these products, they won’t lack for mod-ern design features. Consider the initial offerings: SecureLiving Index 7, a seven-year surrender charge policy with mar-ket value adjustment (MVA), and Secure-Living Index 10 Plus, a 10-year surrender charge policy with MVA. Both products offer five crediting strategies, 10 percent penalty-free annual withdrawals begin-ning in year two, an optional income protection rider with daily benefit base growth, a waiver for confinement to a 34 InsuranceNewsNet Magazine February 2012 medical care facility, and annuitization options. The policies include a bailout provision, too. is cAsh becoming A hot PotAto? In 4Q of 2011, 62 percent of investors surveyed online for the Hancock Inves-tor Sentiment Index said they feel that now is a bad or very bad time to be hold-ing on to cash in the form of CDs, money markets or similar products. That is up from 53 percent in 3Q. The index is published quarterly by John Hancock Financial, Boston, and reflects the percentage of those who say they believe it is a “good” or “very good” time to invest, minus those who feel the opposite. The finding about cash raises an interesting question: if more inves-tors start snubbing cash, what might their feelings be about annuities? The survey announcement doesn’t say, but it does mention the following: “Three out of four investors said they believe that now is a good or very good time to be investing in retirement products such as Fixed annuity sales in banks hit $4.1 billion in 3Q of 2011, an increase of 3 percent compared to the year before, according to the American Bankers Insurance Association, Washington. Fixed-rate non-market value adjusted annuities accounted for at least two-thirds of banks’ fixed annuity sales, says Jeremy Alexander, president and CEO of Beacon Research, the Evanston, Ill. service that provides estimated fixed annuity sales data to the association. As usual, says Alexander, the non-MVA products drove overall results. The news wasn’t so good where quarter-to-quarter sales are con-cerned, however. Fixed annuity sales in banks fell 19 percent between 2Q to 3Q, ABIA reports. Alexander attri-butes that decline to third quarter’s “very low” fixed annuity interest rates and the overall flight to the safety of Treasury bills and government guaran-tees. But if the John Hancock finding— that more investors are starting to think that this is a bad time to invest in cash products such as CDs and money mar-ket funds—then who knows what next quarter’s results will bring? Visit Annuitynews.com for exclusive sales ideas: Use the Low Interest Rate Environment to Boost Sales By W. Andrew Unkefer Do you know the one product you can sell that becomes increasingly more attractive in a low interest rate environment? To find out, go to http://bit.ly/LowRateBoost @Annuity_ news
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