Annuity FYI Blog

For the first time in awhile, fixed annuities are selling better than variable annuities.  It’s no wonder with a financial marketplace that has been less than stable recently.  New York Life sells more immediate fixed annuities than anyone; they have seen an 80% increase in those sales from first quarter 2008 to 2009.  Even more amazing than that is MetLife’s deferred fixed annuity sales growth.  These sales have increased 12,000% from 2008 to 2009.  That is almost unbelievable.

So why the increases?  It’s fairly simple.  These annuities offer guaranteed payouts of 5% (deferred) and 8% (immediate).  That’s better than CD’s and Treasuries.  Fixed Annuities also help to preserve your capital and offer reliable income at a time when many other investments have tanked.  Most advisors recommend using annuities as the basis of your retirement plan and even combining them with other investments that carry more risk.

The U.S. Annuity business of ING Group NV has a new chief financial officer/chief insurance risk officer, according to Matt Ackermann at American Banker.   This was announced on Thursday after a recent company change to low-cost and simple retail annuity products. Michael Smith will be working for ING at the company’s offices in WestChester, Pa.  He comes from 21 years at Lincoln Retirement Solutions where he was in charge of both risk management and profitability.  The CEO of ING’s U.S. Annuity business, Bill Low, will be Smith’s direct boss.  Mr. Smith will take charge of all financial and actuarial operations related to his new business.

For prepared retirees with a 401(k) and/or IRA, consider supplementing your income with an annuity.  Annuities are contracts between investors and insurance companies that start with an initial investment.  Immediate annuities start releasing monthly payments right away, so they are paid for up front with a lump sum.  Deferred annuities pay money at a specified date in the future, so they can be purchased with a lump sum or a string of payments made over time.

Fixed annuities will not increase or decrease in value, whereas variable annuities offer growth potential and added risk.  Both options defer taxes until withdrawal at age 59 or later.  This valuable information comes from the Wausau Daily Herald in Wisconsin.

Jackson National Life Insurance Company has fixed annuities to thank for it’s increasing sales in the first quarter of 2009.  While sales of their variable annuities were down compared to last year, sales of traditional fixed annuities almost doubled from the same period last year.  And their fixed index annuity sales increased by 83% from first quarter 2008 to first quarter 2009.

Financial strength ratings for Jackson have ranged from good (Moody’s) to superior (A.M. Best) and have been solid for six years.  According to President and CEO Clark Manning, “Jackson’s prudent approach to product pricing and risk management is a significant competitive advantage in the current market environment.”  They could be worth checking out for those seeking new financial opportunities.

According to the Pension Rights Center, 2009 is on track to have substantially more companies freezing the pensions of their employees than 2008.  Soon to be retirees really need to look over their options with a fine toothed comb.  The economy is likely to recover.  Unfortunately for those needing to retire soon, it may not recover in time to regain the losses from where their money currently sits.

Lifetime income annuities may be the answer for those retirees.  The Wharton Financial Institutions Center states that these annuities “are the most cost-effective and least risky asset class for generating guaranteed retirement income for life,” says Lily Fu of Myfox Boston.  After balancing your risk, your money, your time, and your desired retirement lifestyle, an annuity can work for you.