Annuity FYI Blog

The Annuity News Journal article by Henry Steelman, “Is it wise to delay my annuity,” examines the benefits to deferred versus immediate annuities.  When purchasing an annuity, you have the option to start receiving payments immediately with an immediate annuity or to defer your payments until some predetermined point in the future.  If you choose an immediate annuity, you will start receiving monthly payments soon after your annuity purchase.  This is the best type of annuity for someone who has just retired and needs to maintain their monthly income to meet basic living expenses.  If you have won or inherited money and don’t need it right away, it’s probably a good idea to purchase a deferred annuity.

A deferred annuity has some advantages based on your particular risk tolerance and financial needs.  If you purchase an annuity and don’t need the monthly income right away, deferring your annuity can allow you to grow your account with interest until you need to start taking payouts.  That money grows tax-deferred which is another benefit of waiting to take your money.  It’s important to look closely at the annuity rates to make sure that your interest will be greater than the rate of inflation.  Inflation makes everything cost more, so you want to grow your money more that the added costs of inflation.  Your individual situation will be the deciding factor as to whether you choose a deferred or immediate annuity.

Written by Rachel Summit

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The retirement income business and the broker-dealer unit have been combined by New York Life Insurance Co.  They just reorganized their company into two separate businesses.  Their insurance group will remain a separate entity from the other business of retirement income.  New York Life Investments, the broker-dealer unit, will join with New York Life’s retirement income business and be headed by Executive VP John Y. Kim.  Currently, the retirement income business includes both immediate and deferred fixed annuities as well as variable annuities.

Kim has been in charge of New York Life Investments since 2008.  He will now be in charge of New York Life’s retail annuities and mutual funds, as well as their retirement plan services and institutional asset management.  Executive VP Chris Blunt will be running the separate insurance business; he previously was in charge of the retirement income business that has been combined with New York Life Investments.  His job responsibilities in addition to running the insurance business will include the company’s long term care insurance and the business operations of marketing, finance, technology, and service.  The Mexico operations are also now part of this new group.

New York Life’s market share has increased to double digits since they started their reorganization in 2008.  They have also seen significant growth in their investment business and retirement products like annuities.  This realignment will help them keep their focus on agency led distribution.  Their 12,000 agents will still be overseen by Executive VP Mark Pfaff.  The company believes this realignment will help them keep their top spot in the life insurance industry and annuity industry, as well as increase their other retirement business.  A.M. Best rates New York Life Superior with an A++ score.

Written by Rachel Summit

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In Maria Wood’s LifeHealthPro article “Checking Into Annuities,” the author draws a comparison between the annuity industry and the hotel industry after working in both.  Both annuities and hotels may seem like simple products at first glance, but both have many different options and their industries work hard to cater to the needs of their clients.  For people who didn’t want to pay more money for hotel amenities they didn’t use, hotels started changing their offerings and excluding some items to make rates cheaper.  There is always the option of an expensive hotel with all the amenities for those looking of course.

The annuity industry works hard to to cater to clients’ needs while maintaining their bottom line.  That is what brought about the options of fixed annuities, variable annuities, indexed annuities, and deferred versus immediate annuities.  Some annuities exist that combine long term care insurance or life insurance with an annuity product.  There are many options for funds, riders, and distribution channels when looking into the best immediate annuities and deferred annuities.

Innovation is important in both the annuity industry and the hotel industry.  With hotels, it ensures that everyone can get the exact amenities they want for the price.  The same holds true for annuity products.  If you want to pay more for GLWBs, death benefits, or other annuity riders; that is available to you.  Variable annuities are great for investors who like some risk and can handle stock market ups and downs.  Those looking to take on little to no risk are better suited for indexed annuity products.  Annuities and hotels both try to cater to the clients who use or will use them.

Written by Rachel Summit

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There is a good chance that you are one of the many people who underestimate the strain inflation is likely to place on your finances in the future.  It is important to account for inflation in one way or another so that your money doesn’t run out faster than you planned.  Steve Burns of the Daily Breeze was asked about inflation and gave his answers in “Keeping up with inflation — stocks vs. bonds.”  Burns recently published an article about evaluating Social Security benefits through the use of an immediate annuity calculator.  The article said that the cost of an inflation-adjusted annuity would be about 50% more than the cost of purchasing a fixed annuity not adjusted for inflation.  A reader wrote in to ask Burns how he came up with this percentage and if he took age into consideration.

He looked at two different companies offering inflation-adjusted annuities.  While the 50% figure seems high to those reading it, he believes that many of us underestimate the real effects that inflation will have.  A 55-year old man using $100,000 to buy a fixed annuity with lifetime income would get a monthly payment of $420.  Compare that to an inflation-adjusted annuity where your payments would start at $268 per month.  That equals out to a 57% increase between the two types of annuities.  That number goes down to 39% if you wait ten years and purchase the annuity at age 65.  While there is a steep increase in the cost of an inflation-adjusted annuity, it is important to to account for inflation in some of your investments, whether it be your annuities or not.

Written by Rachel Summit

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The Sacramento Bee published a press release from John Hancock Financial Services introducing their new President of Annuities, John G. Vrysen.  He starts his position immediately and will be in charge of all aspects of John Hancock’s annuity business.  This includes variable annuities, fixed annuities, structured settlements, immediate annuity products, and other fixed products.  His boss is the President of U.S. Wealth Management, Hugh McHaffie.  Mr. Vrysen recently merged many of the company’s life insurance subsidiaries to increase company efficiency.

John Hancock’s President of Financial Services says that Mr. Vrysen has a plethora of both leadership experience and experience in their Variable and Fixed Annuities business.  Since 2008, he was the head of Strategic Initiatives, a position that will now be held by the previous President of Annuities, Marc Costantini.  Mr. Vrysen has worked for Manulife and John Hancock for more than three decades as the variable annuities’ chief actuary, the CFO of US Operations, the fixed annuities general manager, the COO of Wood Logan, and the COO for John Hancock Funds.

Written by Rachel Summit

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