Annuity FYI Visitor Blog

According to Darla Mercado of Investment News, insurance companies have new targets in their sight to increase sales of variable annuities.  Mercado’s article “Insurers target new channels to help boost VA sales” talks about the insurance companies’ plans.  At the Insured Retirement Institute’s marketing conference in New York this week, the panel spoke of their need to change direction due to the financial crisis.  Insurers are looking to reach out to different types of potential customers and advisers in previously uncharted territories.

One of the biggest groups of people who could potentially benefit from variable annuities are 401k participants and managed-money programs.  Insurers hope that pre- and post-retirees will make 401k annuity transfers and purchase variable annuities from them.  The purchase of annuities will guarantee a lifetime income stream throughout retirement.  Some new products have also come out of this need to advance with the changing economic climate.  Lincoln Financial is introducing a long-term-care rider with both their fixed and variable annuities.  Updates and changes from insurance companies are meant to help consumers in the long run.  A little competition can breed great ideas.

In The Insurance Letter’s article “Proposed Legislation Should Boost Retirement Annuity Sales,” Alan Levine describes Senate bill 2832.  The proposed amendment to the Employee Retirement Income Security Act of 1974 is meant to help broaden the awareness of planning for a lifetime of retirement income.  Most retirement plans now only show the lump-sum value on participants annual statements.  This bill would require 401k and other private retirement plans to show more information on their annual statements.  Plan sponsors would have to show how that lump-sum value will pay out in guaranteed monthly income, based on retirement age and the investment vehicles used by participants.

Senate bill 2832 could encourage investors to make 401k annuity rollovers with their retirement income.  Since a lump-sum value is really only half of the retirement picture, investors ability to see how their money translates into guaranteed lifetime payments is crucial.  With the government’s possible new requirements, 401k and other retirement plan sponsors might be adding more immediate annuities and variable annuities that have guaranteed lifetime withdrawal benefits.  With more than $3 trillion in retirement plan assets, the government’s regulations could surely effect a lot of annuity decision making.  The government would not require annuities to be offered, but by requiring monthly payout options to be disclosed, annuities seem to offer the best guaranteed income benefits.

According to “More 401(k) Sponsors Consider Annuities: Survey” from the National Underwriter Online News Service, the 401k annuity is becoming increasingly popular.  A recent survey from Watson Wyatt Worldwide Inc. shows that more and more employers are offering annuity products to employees participating in 401k programs.  Companies are looking to provide their employees with a steady stream of income after retirement and they are realizing that annuities are a great way to offer just that.

The U.S. Department of Labor is working to get employers to offer lifetime annuities or other comparable products in their defined contribution plans.  The WWW survey showed that 22% of employers with 401k plans offer annuity choices.  At least 10% more are considering adding the option for their employees.  The recent economic crisis forced many employees to hold off retiring because their 401k retirement accounts lost so much value.  Annuities are an investment vehicle that eliminates that risk of losing money in a bad economy so they are a great product from the employee’s standpoint.  The reason that employers were less apt to offer annuities in the past was a lack of employee demand and the administrative complexities.  Now that the 401k risks have been exposed, both employers and employees are looking for less-risky ways to use their 401k money for retirement.

In “Pru annuities go online” by Peter Carvill of FT Adviser, Carvill details Prudential’s new online application process for annuities.  Advisers previously had to fill out paper applications but can now fill them out online for their clients.  Prudential’s PR Manager highlights the advantage of avoiding post office and other delays with paper applications.  Whether the client needs a 401k annuity transfer or another type, the annuity transfer times are sped up by this new process.

This new system accepts applications for Income Choice, With-Profits Pension and the Guaranteed Pension products.  Advisers are able to verify the clients themselves so that identification processes are no longer needed.  This allows for any errors to be automatically fixed.  The postcode-checking software will greatly reduce any chance of error as well.  Doing work online makes the process easier and faster for both the clients and the advisers.

The importance of rolling retirement plans into annuities is discussed in Kyle Fitzsimmons’ article “The Pension to Annuity Rollover: Solidifying Futures,” published via Official Wire. Whether you have a pension or a 401k at your place of employment, this tough economy is causing employers to drop pensions and stop contributing to employees’ 401k plans left and right.  Making a pension or 401k annuity rollover with a reputable insurance company can be a way to ensure your money makes it to retirement with you.

Do your research to find a reputable insurance company and compare annuities to find the best product for your money.  Most annuities will grow in value and offer little to no risk of losing your principal value.  Fitzsimmons warns that even the best annuity will do nothing for you if purchased through the worst insurance company.  That is why it is best to speak with an expert to determine a wise place to invest your money.  Most insurance companies can take your pension or 401k annuity rollover and offer you guaranteed income over your lifetime.