Annuity FYI Visitor Blog

New York Life Insurance Company had a great first half of 2010 thanks to their sales of long term care insurance, fixed annuities, and mutual funds.  According to Insurance News Net’s “New York Life Sees 47% Rise in Life Insurance Sales in First Half of 2010,” the largest mutual life insurer in the U.S. and its 11,500 agents will remain leaders in their marketplace.

The 47% increase in sales of individual life insurance is even in comparison to 2009’s all-time record sales.  Their Custom Whole Life insurance allows consumers to choose how long they pay their premiums.  Sales increases of permanent insurance and term products helped the growth this year.  Americans choose New York Life for their stability, guarantees, and exceptional agents.  Clients are choosing whole life policies because of the death benefits they offer as well as the cash value benefits you get while living.  New York Life has the largest portion of new life insurance premiums in the U.S.

With a record $870 million in new lifetime income annuity sales for the six-month period, New York Life is grateful to its sales agents and third party distribution channels.  Their fixed immediate annuity products have much value to offer both pre-retirees and retirees.  New York Life has recently had their financial security ratings affirmed by all four agencies so they are an obvious choice for the guaranteed lifetime income offered by fixed immediate annuities.  Long term care insurance purchases are also increasing because of the surge in health care issues associated with living a longer life.  New York Life’s mutual funds are seeing sales increases as well because of their widespread field of agents and distribution channels across the U.S.

According to California’s Daily Breeze article “MONEYWISE: Looking into the renewed interest in investing in annuities,” Stephanie Enright says that the government’s interest in promoting annuities has sparked an increased interest from investors.  Annuities are most often issued by insurance companies and grow over time with the expectation that you can receive lifetime income payments in retirement.  Two reasons annuities are popular are that some have a long-term-care insurance rider, which is increasingly popular today.  They also grow tax-deferred until you receive your money, then they are taxed like ordinary income.

Fixed annuities and variable annuities are your two options.  The fixed variety gives you a certain return based on interest rates at the time of purchase or a link to a financial index.  Variable annuities can have greater risk, but greater reward as your return is variable.

The author believes that the two most important things to consider when looking into annuities are the financial strength of the insurance company issuing the product and the structure of your contract.  Comdex ranks insurers based on the financial strength ratings from companies like Moodys, Standard & Poor’s, and A.M. Best Co.  Their stability and financial strength is the only thing guaranteeing your lifetime income payments.  You also want to know how your annuity agent is paid through commissions and fees.  Other contract details include riders like death benefits for spouses or other relatives.  Make sure you know all of the annuity details before purchasing the product.

In the Financial Times Adviser article “Retirement reform must be linked to LTC,” Samantha Downes talks about Just Retirement’s push for annuities.  Pension provider Just Retirement wants any pension reform by the government to include long term care needs.  While they have started to phase out the default retirement age and Just Retirement is pleased with that, the provider hopes that pension reform will include rules that allow an immediate annuity to take over long term care costs when they arise.  As people retire later in life and live longer, these long term care provisions are even more important since the longer you live the more likely you will suffer deteriorating health.

As people’s health changes, their need for income increases with these new and quite large health care costs.  By the government reviewing pensions and making it easier to use a 401k annuity transfer or other type of annuity towards long term care, people should be better suited to meet their own needs in retirement.  A large population around the globe is aging and nearing retirement age.  In order for them to live a comfortable life they will need any long term health care costs to be covered without draining their savings.  Government regulation already in action should take these needs into consideration as plans move forward.

The Insured Retirement Institute (IRI), the non-profit organization promoting insured products like annuities, has introduced a retirement pyramid.  The pyramid aims to provide a secure retirement for its users by putting the largest amount of money into the largest or bottom tier and gradually decreasing the amounts as you climb the pyramid.  National Underwriter’s article “IRI Promotes Retirement Planning Pyramid” explains the strategy.  This week is the IRI’s National Retirement Planning Week of 2010, so they chose this time to promote the retirement pyramid.

This pyramid concept is meant for both consumers and professionals in the financial industry to use.  The three items making up the base of the pyramid are annuities, social security, and defined benefit pension income.  The second tier, called “long-term assets”, includes fixed annuity and other annuity income, 401k plans, real estate, and individual retirement accounts.  “Insurance” is the third tier encompassing Medicare, health insurance, life insurance, and long term care insurance.  The IRI’s top tier, “Investments”, is where they put stocks, bonds, mutual funds and certificates of deposit.

According to the National Underwriter’s article “Annuity With LTC Rider Debuts,” Genworth Financial Inc. has a new annuity product to introduce.  The Total Living Coverage Annuity is a linked-benefit policy linking this single premium non-qualified deferred annuity and a long term care insurance rider.  Genworth Life Insurance Company is the underwriter.  This annuity contract enables investors to buy long term care insurance that is up to three times the amount of their single premium by using their annuity value.  By doing this, they essentially have a “pool of benefit dollars for their LTC expenses.”  Once a claim is filed, benefits come first from the annuity value and then out of the pool that remains.

The Pension Protection Act of 2006 makes the LTC claim payments tax-free for the investor.  It may also be possible for some consumers to purchase the policy with a tax-free 1035 exchange from an annuity or life policy they already have.  Some of the highlighted annuity features include LTC coverage that is renewable and guaranteed, a simplified underwriting process, inflation protection as an optional addition, and the waiver of a monthly provision for LTC charges.  This new product is one of the best annuities for people with assets over $200,000 to protect that are near or in retirement, know that the need for LTC could be in their future and could financially hurt them if not insured against, and are already self-insuring against the LTC risk for their future.