Annuity FYI Visitor Blog

Would you be interested in a comic book that helps to explain annuities and other retirement vehicles?  In The Netherlands, pension plan participants under the age of 35 will be receiving such comic books.  “A Comic Approach to Participant-Ed” by Kerry Pechter of the Retirement Income Journal describes the comic books as a little bit racy but mostly educational.  The goal of the pension administrator who developed the comic books, SPF Beheer, is to educate their 4,500 under-35 participants about their pension plans.  SPF Beheer realizes that many participants, especially the youngest ones, are not reading the material sent to them.  They are hopeful that this 96-page comic book will change all that.

The plotline follows a young financial advisor who loves model trains on an adventure dream throughout much of the world.  He meets many people on the train trip including a pretty pension representative and a famous starlet who entertain and educate him along the way.  The plan is not to overload with information about 401k annuities and pension plans but to lightly touch on the information that SPF Beheer wants its participants to know.

The question remains whether this kind of comic book approach would work in America.  Every culture reacts differently to raciness and new ways of communicating in general.  Time will tell how the Dutch react to their new retirement information because there are supporters and of course critics as well.  Educating future retirees on their options and the details of their annuities, stocks, bonds, and pensions is a goal for any plan administrator.  It can be even more difficult to relay information to young workers who feel that their retirement is out of sight.  If an entertaining and humorous yet informative comic book can help to meet that goal, maybe it is worth trying out.

According to National Underwriter, the news source for life and health agents, Jackson National Life Insurance Company has a new variable annuity product to offer.  It is called ‘Prospective Rewards’ and offers an automatic bonus.  The percentage of the bonus is based on the amount of your initial investment.  An 8% bonus is available for initial premiums adjusted at $100,000 and above.  For adjusted premiums less than $100,000, investors will earn a bonus of 6%.  Jackson says that both the 6% and 8% premiums could also be available for future premium payments.  In a time where many companies are not offering as much in the form of variable annuities, this product from Jackson is a great option for investors seeking a VA.  Jackson National Life Insurance company out of Lansing, MI is part of London’s Prudential P.L.C.

From a press release on Reuters, “A.M. Best Affirms Ratings of Symetra Financial Corporation and Its Subsidiaries.”  Symetra Life Insurance Company out of Bellevue, WA and its subsidiary, First Symetra National Life Insurance Company of New York, received a financial strength rating of A (excellent) and issuer credit ratings of a+ from A.M. Best Company.  All of the ratings issued for Symetra are considered to be stable going forward.

The company’s liquidity is solid as is their risk-adjusted capital position.  All four of Symetra’s business segments maintain consistent operating profitability and they continue to grow despite difficult economic conditions.  These reasons along with the fact that Symetra carries significantly less asset risk on its balance sheet than peers with similar financial ratings, helped to determine their A.M. Best rating.

Symetra is challenged to maintain its strong financial ratings despite a short list of factors that could throw them off track.  Current economic conditions, a heavy concentration in product lines that are spread-based or otherwise commoditized, a large number of immediate annuities and structured settlements that expose them to reinvestment risk, and some other risks are being watched closely.  Since 90% of Symetra’s product sales in the first half of 2009 were from fixed annuities, they are closely managing the asset and liability duration match that has improved their cash flow in the past to keep their excellent rating.

Financial Advisor’s article “Annuities For The Middle Class?” by Eric Rasmussen discusses the recent increase in annuity purchases, especially by the middle class.  Their safety and security has drawn consumers’ in by record numbers, largely due to the volatile stock market and consumers fear of losing their savings.  The sales of fixed annuities nearly doubled in the last 12 months from the year prior to that according to Beacon Research.  For the first half of this year, fixed annuity sales were $62.56 billion, up from $44.89 billion in the first half of 2008.

Notably, middle class consumers are making up a significant percentage of annuity sales.  According to a Gallup Organization survey, 80% of annuity owners have an income below $100,000.  Forty-two percent have an income below $50,000.  The draw of good annuity rates and guaranteed income for life brings in consumers looking for low risk and a secure retirement.  When you have less money to work with you need to make it count.  Experts advise taking advantage of all company sponsored retirement plans in addition to funding your annuity and most believe that a combination of retirement products is the way to fund retirement successfully.

The National Association of Insurance Commissioners is still working on a new model act to ensure the suitability of annuities even though some people were questioning the need for such an act.  This information comes from insurancenewsnet’s article “Plan for New Annuity Model Continues at NAIC.”  The model currently being used is from 2006 and called Suitability in Annuity Transactions Model Regulation.  According to Sean Dilweg, the Wisconsin Insurance Commissioner and chairman of the Suitability in Annuity Transactions Model Regulation, a new plan is necessary to keep up with recent changes in the marketplace and new regulations.

Insurance companies would be held more accountable for ensuring the suitability of their annuity products whereas they currently can pass that responsibility off to either third parties or the broker-dealers.  The new model is applied to all consumers, regardless of their age.  Fixed annuity rates and policies must be proven to be the best option for each individual customer as do the variable annuity policies.  The new model is similar to practices already put in place by the federal government for broker-dealers and other advisers regarding variable annuities.