Annuity FYI Visitor Blog

With $30 billion of sales in 2009, indexed annuities set a record for the highest sales of all time, according to “2009 Indexed Annuity Sales Set Record” from Insurance News Net.  The previous record from 2007 was beat by close to 10%.  Data representing 99% of the companies selling indexed annuities was collected by Annuity Spec’s Indexed Sales and Market Report.  While 4th quarter indexed annuity sales were down from the third quarter, sales levels were adjusting back to a normal level after their record highs.

Allianz Life remained in the top spot for total 2009 sales, as well as staying in the #1 carrier position in the market.  Their MasterDex X held its position as the top selling indexed annuity for the third quarter in a row.  Indexed annuities are tied to the markets, proving that their annuity rates were popular to investors.  After Allianz Life, Aviva moved up to the second spot in this annuities market.  The third, fourth, and fifth spots were occupied by American Equity, Jackson National, and ING.  In regards to bank and wirehouse 4th quarter distributions, Jackson National Life had the most indexed annuity sales.

According to Business Wire press release “For Consumers Nearing Retirement: New Allianz Life Annuity Can Generate Income After Just 5 Years”, Allianz Life Insurance Company of North America is adding to the fixed annuities market with its Endurance Elite product.  Endurance Elite is geared towards investors that are nearing their retirement because the benefits can be as little as 5 years out.  The Census Bureau predicts that almost 30% of the population in 2020 will be over the age of 55 so the timing is right for such a product.

The senior vice president of sales for Allianz Life, Eric J. Thomes, says that the product was developed purely because customers were asking for it.  Protecting their retirement savings into the future is at the forefront of most cautious consumers’ minds.  Endurance Elite offers protection for the principal amount purchased, the possibility of accumulation, and retirement income that is available in as little as 5 years with the potential for growth.  It is already for sale in 40 states.  The income benefit value that is built-in does not add cost and even has a 10% premium bonus.  You will also receive lifetime retirement income based on the income benefit value and the potential for yearly increases.  Rolling over 401k annuities to purchase this new fixed index annuity from Allianz Life may benefit your retirement savings account.

From Online PR News, Rafael Onak’s article “Find Solidity in a High Interest Annuity” urges investors to take advantage of the opportunity before it passes by.  High interest annuities offer a guaranteed rate of return while the rest of the equity market is still pretty volatile.  They are available as variable annuities, fixed annuities, or equity-indexed annuities.  Variable and fixed are the most common types of high interest annuities.  You can get a 10 to 14 percent rate of return with variable annuities but the product is the riskier investment.  Fixed annuity rates are guaranteed, but the investor loses the ability to directly manage their account.

High interest annuities grow at a faster rate than other investment products.  They also offer guaranteed income over your lifetime and withdrawal benefits.  Making a 401k annuity transfer to purchase a high interest annuity can give you tremendous tax savings as well.  Annuities grow tax-free until an investor begins receiving payments, unlike CD’s that are taxed yearly.  As with all retirement products, investors should shop around for the best annuities to add to their portfolio and speak with an expert.

The National Association of Insurance Commissioners just had a fall meeting to discuss the changing regulation needs regarding annuities, according to “Taking on the next steps in annuity regulation” by Brian Atchison of Investment News.  Consistency across the U.S. seems to be the biggest problem relating to annuity regulation.  State and federal regulators are in charge of overseeing variable annuity sales transactions, but they have differences in their policies.  Fixed and indexed annuities are only regulated by state agencies who follow the guidelines of the NAIC.  This is all changing with new regulations.

The NAIC’s Suitability in Annuity Transactions Model Regulation has been adopted by 41 states.  It basically says that any annuity being sold has be suitable to the purchasers’ needs and will be subject to regulators if it is not.  Unfortunately all states have not adopted the regulations and those that have are interpreting the rule in their own ways, so nothing is standard across the U.S.  The Insurance Marketplace Standards Association and Finra have proposed that the NAIC give more guidance, direction and greater enforcement to the 41 states following their guidelines.  With that proposal, the NAIC has decided not to change their current guidelines, but to focus on meshing them with Finra Rule 2821.  As IMSA, the NAIC, and Finra are able to work together to regulate annuities, it can only help consumers’ interests.

In “The Four Types of Annuities” by Stephen P. Poitevint of The Post-Searchlight, Poitevant explains the four basic types of annuities.  Annuity products in general are increasing in popularity because investors want to make sure that their money lasts as long as they do.

Fixed annuities offer a guaranteed principal and interest rate with an up front purchase from an insurance company.  Fixed annuity rates vary but are currently around 4.5%.  Indexed annuities are a type of fixed annuity where your principal is guaranteed but in exchange for giving up your guaranteed interest, you receive the chance to earn added interest based on a stock market index increase.  Investors like this type of annuity because of the “floor” associated with it:  the value will not fall if the market does.

Variable annuities are based on the performance of the market and do not guarantee an interest rate, but a death benefit rider will ensure that your beneficiaries will receive at least the principal you invested, even if your account has declined in value.  There are many additional riders that can be added to your purchase with additional guarantees at a cost.  The first three types of annuities offer a stream of income starting at some point in the future, but immediate annuities begin payouts immediately.  The time frame you will receive payments is determined at the purchase and can last for any time frame up to life.  The most common type is lifetime or 20 years, which is known as “life or period certain” and immediate annuities can be either variable or fixed.