Annuity FYI Blog

S.1389 is a bill that Senator Bill Nelson (D-NE) and his cosponsors Senators Saxby Chambliss (R-GA), Tom Harkin (D-IA), and Sam Brownback (R-KS) have introduced as a companion to the Meeks-Price Bill previously mentioned on this blog.  This bill is backed by the Coalition for Indexed Products, according to PR Newswire via Marketwatch.com.  “S.1389 seeks to clarify the exemption from certain annuity contracts and insurance policies from Federal regulation under the Securities Act of 1933.” The House and the Senate bills desire to overturn the SEC’s new rule reclassifying fixed indexed annuities as securities so the SEC can regulate them.

Since fixed indexed annuities are already being regulated by commissioners in each state, Jim Poolman of the Coalition for Indexed Products points out that this SEC rule will cause double regulation.  Poolman also states that difficulties will arise for the middle class purchasers because of this duplication.  There may be additional cosponsors to this bill from both sides of the aisle.

As stated in a company press release on Datamonitor via COMTEX, Great American Life Insurance has released a new single premium fixed-indexed annuity product.  GALI is a subsidiary of Great American Financial Resources.  The product is called Safe Return and is meant for people who want to both preserve their wealth and have the possibility of growing it.  The two features that accomplish this and make Safe Return stand out from Great American Life’s other product offerings are a bailout cap and a return of premium component.

Great American Financial Resources executive vice president and the manager of the single premium group, Malott Nyhart stressed the importance of Safe Return right now.  He said that all consumers are very concerned with securing their financial future.  The two new features provide much more protection of the clients’ investments, while preserving their retirement income.

Sales of immediate fixed annuities have skyrocketed recently because of the peace of mind they offer retirees with guaranteed income for life, according to “An Annuity that Pays Now and Forever” by Kathryn Walson of Kiplinger’s Retirement Report.  Insurance research group LIMRA International stated that sales of these annuities were up 23% from the 4th quarter of 2007 to the 4th quarter of 2008.  These annuities are best suited for retirees or those nearing retirement since payments begin immediately.  The payouts are based on the amount invested, the purchaser’s age, and current interest rates.

What some might consider drawbacks to immediate fixed annuities can be avoided entirely by the annuity you actually purchase.  If you are worried that you might die before you get your investment back, you can purchase a joint life annuity so that your spouse will continue to receive payments until their death.  Although current low interest rates may go up without you reaping the benefits, you are completely protected against downturns like we are experiencing now and against living so long that you run out of money.  That is peace of  mind worth purchasing.  You can also purchase an inflation-adjusted annuity if you are concerned with fixed monthly payments.  That way, your payments will increase 3% yearly.  There are many important reasons that immediate fixed annuities are very popular right now.

Due to the recent financial crises affecting America, President Obama’s White House has proposed changes affecting all of the U.S. banking and market operations.  Maura Lockwood, of Cabot Headline News, writes this in “U.S. Administration Proposes Historic Financial Overhaul.”  The goal appears to be lessening the large rises and steep falls of the markets which thus far has been unattainable in U.S. financial history.  The White House believes that stronger federal rules are necessary.

The focal point would be a new government agency with authority over annuities, mortgages, savings accounts and credit cards.  Other highlights include some shareholder control over executive earnings, firms being forced to hold a portion of the loans they sell, and federal regulation of hedge funds.  There is expected to be strong opposition from both Democrats and Republicans so stay tuned for updates.

In the McClatchy-Tribune News Service, Dan Serra wrote an article about the benefits of fixed annuities compared to other retirement options that have been severely depleted since last October.  According to the Beacon Research Fixed Annuity Premium Study, fixed annuity sales increased 78% from the first quarter of 2008 to the first quarter of 2009.  And even though variable annuities have seen some decline, their sales have only decreased 5% in the same first quarter comparison while the overall market has tumbled much more.  Annuities hold strong as a great retirement investment.

Fixed annuities seem to be the top option for retirees with average savings because it is one of the best ways to guarantee payments through your entire life.  Once you know your fixed payment, you can make a monthly budget for your expenses with this stable income.  There are many things to consider with an annuity like the up front payment, inflation, growth potential, and inheritances.  By putting the portion of money you will need monthly into your annuity and spreading other savings out, your financial future can be set.