Annuity FYI Blog

According to Investment News’ Darla Mercado, financial advisors are more loyal to Jackson National Life Insurance Co.’s variable annuity products than to any other company.  In the article, “Advisers most loyal to this VA provider,” we learn that Jackson National had the best variable annuity reviews followed by Prudential Financial Inc.  Jackson moved up from second place last year to throw Prudential out of the top spot this year.

Cogent Research performed the study of over 1,500 financial advisors.  They were asked what percentage of their business was dedicated to variable annuities and they rated their happiness with certain variable annuity factors.

Jackson’s internal wholesaler support had such a high ranking that it helped them grab the top spot.  Prudential had the highest variable annuity reviews for different product features, even though they didn’t get the top spot overall.  Advisors liked their guarantees, especially the Highest Daily feature.  Jackson does have nearly 100 subaccount choices as well, which still helped them reach number one.

The ChoicePlus variable annuity from Lincoln National kept them in third place this year.  Ameriprise Financial maintained their fourth place spot year to year.  Nationwide took the fifth spot from Ohio National, who came in seventh.  MetLife was in sixth place this year as well as last.  Sun Life, Allianz Life, and Transamerica finish the top ten for variable annuities.

Written by Rachel Summit

After a period of time where variable annuity products that were fee-based had a bad reputation, some of the biggest annuity companies are revamping the products.  Reuters Linda Stern discusses this new trend in her article “Analysis: New fee-only annuities aim to move upscale.”  More advisors are changing to fee-only practices now and insurance companies are making new products to attract them.  Retirement security has become more important than ever before during the past few years causing investors to change their willingness to pay more for better guarantees, like those offered with annuities.  More affluent investors tend to use fee-only advisors and they really appreciate the tax-deferral that comes with a variable annuity.

No-load, or fee-only, variable annuities are a very small portion of the total variable annuity market, but they are increasing yearly.  This year’s sales are expected to be 22% higher than sales in 2010.  Some of the big name companies introducing new fee-only variable annuity products include Allianz Life, AXA Equitable, Prudential, Lincoln National, and Sun Life.  In addition to the appeal of deferring taxes on all growth in the variable annuity, death benefits are another popular option for investors in these products.  Even fee-only variable annuities where you don’t pay commission are not right for everyone.  Depending on the mutual funds the annuities are tied to, your fees could be as much as commission on a basic variable annuity.  As with many annuities, getting past the preconceived notion the name carries can be the biggest hurdle for those who don’t understand all the benefits that come with a variable annuity.

A new partnership between Lincoln Financial Group and Humana Inc. will make it easier for consumers to purchase fixed indexed annuities and long term care insurance.  According to Annuity News Journal’s article “Humana Inc. Forms Partnership with Lincoln Financial,” Henry Steelman writes that more than 2000 agents for Humana will be selling the financial products of Lincoln.  Humana Inc. is a health insurance company out of Kentucky, selling policies to consumers nationwide.  Lincoln Financial, out of Pennsysylvania, offers many different financial services around the United States.  This partnership between the two companies allows consumers nearing retirement to purchase all of their necessities in one convenient place.  They’ll be able to get health insurance as well as financial planning products from the same agent.

Lincoln Financial, traded on the NYSE as Lincoln National Corp., offers numerous annuities and insurance products to their consumers.  The financial products that will be sold through Humana are fixed indexed annuities and MoneyGuard, a form of long term care insurance.  As the cost for long term care increases dramatically, insurance to protect against that expense becomes more important than ever.  Between long term care insurance and annuities to cover basic living expenses in retirement, Humana believes that they are offering their consumers important products to complement their health insurance.  They don’t think there is much more important than protecting yourself with health insurance and the proper finances to carry you through life.  Since many consumers don’t have a financial advisor, having these products available through their health insurance company allows consumers access to financial products they may not have seen before.

Variable annuity sales increased from the 1st quarter of 2009 to the first quarter of 2010, according to Insurance News Net’s “US Sales of Variable Annuities See First Year-Over-Year Gain in Two Years.”  With $31.4 billion in total sales, variable annuities increased 3% from the same time last year.  The first quarter of 2008 was the last time that there was such an increase in variable annuity sales.  A spokeswoman for the Insured Retirement Institute says that this marks a slow and cautious return to the stock market for investors.  The sales are from both individual and group annuities.

Eighty-percent of investors who purchased a variable annuity also included some type of living benefit guarantee.  The most popular was the guaranteed lifetime withdrawal benefit.  Purchasing a death benefit annuity was also widely popular to protect investors’ heirs.  Prudential Financial, Inc. remained the top variable annuity seller in the first quarter of 2010, after capturing the top spot for all of 2009.  The rest of the top five companies were MetLife, TIAA-CREF, Jackson National Life and Lincoln National Corp.  The consensus with variable annuities is that they are getting simpler for consumers and less risky for insurers.

Fixed annuity sales in the United States were $27.8 billion in the second quarter of 2009, according to a press release from Beacon Research.  While the sales were a 20% decrease from the first quarter, they were 10% higher than the second quarter in 2008.  From the highest sales to the lowest, the annuity products sold were book value, indexed, market value adjusted, and fixed income.  All but one type were an increase from the second quarter in 2008.  Indexed and income annuities were up from the previous quarter, while the other two types fell.  Fixed annuities can be purchased with a 401k annuity transfer or an upfront one time purchase.

New York Life took over the top sales spot last quarter from MetLife.  The rest of the top ten was as follows: Aviva USA, Allianz Life, AEGON/Transamerica, American Equity Investment, RiverSource Life, MetLife, Lincoln Financial Group, Jackson National Life, and Western National Life.  New York Life maintained the top sales in both the book value and fixed income annuity products.  The leading indexed annuity seller remained Aviva.  The only change in leaders of the individual products was American National taking over the top sales spot of market value adjusted annuities.  Beacon uses the sales results of 53 insurance companies which represent 86% of annuity sales to determine their findings.