Annuity FYI Blog

According to a press release by Beacon Research, fixed annuity sales estimates in the U.S. for the first quarter of this year were $34.9 billion.  The Fixed Annuity Premium Study comprised of data from 53 insurance companies, which account for about 86% of this market.  This sales number was not only the highest since 2003 when the study was first completed, but was also 78% higher than the same quarter last year.

The four types of annuities assessed ranked in sales high to low starting with book value annuities, indexed, market-value adjusted, and immediate.  All 4 showed increases from last year’s 1st quarter, while only book value annuities increased from the prior quarter.

The top ten sales leaders were MetLife, New York Life, Aviva USA, RiverSource Life, AEGON/Transamerica Companies, AIG, Allianz Life, Jackson National Life, Principal Financial Group, and USAA Life.  You can check out more of the study information in Beacon Research’s press release.  Contact one of our experts with any questions about fixed annuties from the top ten companies and more.

There are many advantages in choosing an immediate annuity as part of your retirement portfolio.  You can start collecting monthly checks as soon as a month after purchasing the annuity.  This money is guaranteed for the term of the annuity; there are many options for term length.  It can be a specified amount of time, your lifetime, your spouses lifetime, and even a specified time frame for inheritants to receive payments after your death.  Tax-deferral is another benefit.  Annuities are not taxed as they grow over the years, the taxes are paid with the monthly withdrawals, whenever those begin.  The low-risk and cautious strategy of most annuities is seen as a stress-free piece of the big picture of retirement.

There are a few factors to consider when weighing your option of annuities for retirement income.  Fixed and variable annuities are the two main types offered.  With a fixed annuity, you receive interest based on contract terms with the insurance company where you purchased the annuity.  You then receive payments over the time frame specified: a certain number of years, your life, you and your spouse’s life, or your life with a minimum amount of years included.

You receive payments the same way with a variable annuity, but instead of an interest rate base, your annuity is based off of the economic market performance.  If you are worried about a possible market decline, you can purchase guaranteed minimum benefit riders for your variable annuities.  Checking the financial rankings strength of insurance companies before purchasing annuities from them is also a crucial step for securing your monthly payments.  Market risk, length of payments, and finding solid insurance companies are a few of the decisions to make when using annuities for retirement income.

There has been talk lately that gift annuities are not turning out to be the sound investments they should be.  An article in the Personal Journal earlier this month highlighted large problems with two charities going under and not paying annuity payments to the donors.  Basically, a charity or gift annuity is similar to other annuities, but when the donor passes away all remaining monies are left to help the charity continue its services to the community.

Unfortunately, this article with only two examples of poor investments might do unjust harm to the overall charity and gift annuity process.  The American Council on Gift Annuities has over 1,200 charitable organizations that pay their donor’s annuity payments on time and work just as they are meant to, according to the Wall Street Journal.  Investors/donors need to do their research just like with everything else, not letting a few bad apples ruin it for everyone.

When saving for retirement, there are a few questions to ask yourself to see if a variable annuity is right for you.  Even though they have taken some hits in this bear market, TheStreet.com shared 6 scenarios where a variable annuity can be right for your retirement plans.

• You’re looking towards the long-term and won’t need your money before you plan to retire
• Any 401(k)’s or IRA’s that your company sponsors have been maximized with contributions
• You are able to take advantage of the tax-deferral in regards to the investment growth; most important for those in a high tax bracket with six plus years to retirement
• Securing your savings from court accessilbilty is important to you
• You have a trusted financial advisor or believe that you can make appropriate market decisions with your finances
• An emergency fund with available assets is at your ready

If these situations apply to you contact an expert to help you establish a variable annuity.