Annuity FYI Blog

According to “John Hancock Releases Retail Variable Annuity” by Rebecca Moore from Plan Advisor, this new annuity has fewer costs associated with it and is quite simple in comparison to other variable annuities.

AnnuityNote has 5 main benefits for the purchaser.  The first is a guaranteed income for life of 5% after waiting for 5 years.  There also is not a surrender charge so investors can access their money immediately if need be.  The annual expense is 1.74% which includes both the insurance fee and portfolio expense.  There is also exposure to the stock and bond markets, allowing for long-term gains.  Lastly, being insured by a strong company like John Hancock provides financial strenth over time.

There is a required minimum investment of $25,000 and a 3% sales charge to start.  John Hancock recommends purchasers be aged 55-75.  Interested investors can speak with an expert for advice on this and other annuity products.

Standard & Poor’s gives Western & Southern Financial an AA+ rating, putting it in the top 10 life insurance companies, according to The Business Courier of Cincinnati, Ohio.  Western-Southern is on track to set a record for their increasing annuity sales this year.  If their first quarter fixed and variable annuity sales keep stride, they will have an increase of 26% from 2008.  And 2008′s sales were up 59% from 2007, so another large increase is fantastic.  Their CEO John Barrett said “our strong annuity sales are a direct result of the ongoing flight to quality.”  LIMRA International, an association of life insurance and financial firms, says that Western-Southern is one of the top suppliers of individual annuities.

Deferred fixed annuity sales grew by close to 60% last year, according to an article by Janet Kidd Stewart in the Chicago Tribune.  It’s really no surprise as life expectancies continue to rise and many people’s life savings dwindle.  Northwestern Mutual Life Insurance Company actually has a calculator on their website to estimate your life expectancy, which can help determine how long you need to finance.  A one-time lump sum investment is paid out monthly starting at a date in the future with deferred fixed annuities.

Here are two examples of the updates being made.  The Hartford Life Insurance Company updated their Income Annuity last year by adding the ability to both choose the date payments begin and some option to change that date.  New York Life Insurance company added “The Changing Needs Option” rider onto its immediate annuity product.  This rider gives investors the option to add to their initial payment by up to 5 times if they need to in the future.  They can also decrease the amount by half; both do have a fee attached.  These updates are meant to help ensure that you do not outlive your finances.

Americans are saving more than ever and annuity products give the flexibility and guaranteed retirement income they seek for those savings.  For the first time since the beginning of 1995, Americans’ personal rate of savings have skyrocketed to 5.7%.  This report comes from Jeannine Aversa with the Associated Press.  Americans are spending a little less and saving a lot more as their income finally began to grow in May after a stagnant April.  Although economists had forecasted a .2% decline, incomes rose by .5% in May, the largest growth since May of last year.

The income from this growth is the supply for both future spending and saving.  With this glimmer of hope, many Americans remain cautious when deciding what to do with their money.  They want guarantees over high risk after what they have recently witnessed.  Annuities, or insured retirement solutions, are the way to go for many.  Ask an expert how they can help secure your future.

How can you maintain a conservative investment approach while reaping potential benefits from financial markets?  Fixed Indexed Annuities might be a great option for you.  FIAs are tied to market performance, usually the S&P 500, and have higher returns than bonds, CDs and money market accounts most of the time.  The point of an FIA is to exceed fixed market performance rather than beating the financial markets, like a variable annuity.

Your principal is safe from losses in the stock market and you also have the ability to benefit from stock market gains.  A minimum interest rate is usually guaranteed by the issuing insurance company.  Three benefits you usually receive like any fixed annuity are tax deferred growth, monthly income receipts, and a guaranteed minimum death benefit payment to your heirs.  There is also no limit to how much you can contribute yearly, unlike IRAs and 401(k)s.  Check with an expert to learn more about these and other benefits of fixed indexed annuities.