Annuity FYI Blog

The best immediate annuities can defend your financial future against longevity risk, or the possibility of outliving your money.  According to Insurance News Net’s article “Insure Against Longevity Risk with Immediate Annuities,” Mark Miller says that single premium immediate annuities can really secure your retirement.  They only make up about 2% of retiree income currently, but are expected to begin a comeback after flatlining during the economic crisis that started in 2008.  After making a one time payment to an insurance company, investors receive monthly income over the course of their lifetime with the best immediate annuities.  Sales were $7.9 billion in 2008, but have not seen significant growth since that time.

It looks like the SPIA is gaining popularity again though.  With an average buyer age of 73 and an average purchase price of $107,000, annuities help retirees generate income where people used to have pensions and social security to guarantee them payments.  Third party distribution channels are being used more by insurance companies to grow their immediate annuity business.  New York Life saw an increase of 45% in the first quarter and Fidelity, who offers New York Life annuities among others, saw a 25% increase from the fourth quarter of 2010 to the first quarter of this year.

The first step to purchasing the best immediate annuities is to figure out your monthly living expenses in retirement and deduct any social security or pension income you might have.  The gap between your monthly income and expenses will determine the monthly income you need from an annuity.  No one suggests using all of your savings to buy an annuity, but purchase one that will give you the monthly income you need to cover your basic expenses.  Some financial advisors worry that an annuity rates comparison will not give you as high of a return as some other investments and have some other concerns about annuities.  But with some research and more information from the insurance industry, they’ll see that the best immediate annuities can cover their clients against longevity risk.

Fixed annuity sales increased 6% in the first quarter of this year to a level of $18.9 billion.  The Annuity News Journal article; “Sales of Fixed Annuities are Making a Comeback” by Zachary Dristol, says that sales increased in all four types of annuities.  Book value annuities increased by 12%, moving to $8.6 billion in assets.  Market value adjusted annuities increased by 7% and income based annuities increased by .8%.  While there was only a minimal .2% increase in indexed annuity products, their increases over the past year or so have been so significant that the assets are still very high.

From the fourth quarter of last year to the first quarter of this year, book value annuity assets increased by 42%.  In the same time frame, annuity sales in general increased by 7%.  Beacon Research’s CEO said that increasing annuity rates during the first quarter were likely the reason for the fixed annuity sales increase.  In comparison to fixed and variable annuities, indexed annuity products lost some ground probably just due to seasonal changes.  After the financial crisis of 2008, the annuity industry worked hard to distance itself from AIG and be seen for their guaranteed retirement income again.  The top five annuity sellers in the first quarter were Western National, New York Life, Allianz, American Equity, and Aviva.

LIMRA just released annuity sales results from the fourth quarter of 2010 and the total year results, according to Ruthie Ackerman’s article in the Financial Times. “Who Were the Top 20 Annuity Writers in 2010?” summarizes the top sellers.  Total annuity sales were published along with totals for sales of variable annuities and fixed annuities.  Of the top 20, half of them had sales increases over the previous year.  The top three sellers of variable annuities reached sales records, while 70% of the top variable annuity companies saw overall sales increases in 2010.

Prudential Annuities had both the most annuity sales and the highest sales for variable annuities.  They were number one with total annuity sales of $23.3 billion and variable annuity sales of $21.7 billion.  They were fourteenth in their sales of fixed annuities.  Allianz Life of North America sold the most fixed annuities, selling $7.1 billion.  They came in seventh in total annuity sales and thirteenth in variable annuity sales.

The top 20 companies accounted for 80% of total annuity sales, 93% of variable annuity sales, and 74% of fixed annuity sales.  Rounding out the top 10 companies in total annuity sales after Prudential were MetLife, Jackson National Life, TIAA-CREF, AIG Companies, Lincoln Financial Group, Allianz Life, New York Life, RiverSource Life Insurance, and ING.  Many of the top 10 annuity sellers also made the top list for variable annuities and fixed annuities.  In addition to those already mentioned, AXA Equitable and Nationwide Financial were in the top 10 for variable annuities.  For fixed annuities, AVIVA, American Equity Investment Life, and Great American were also in the top 10.  LIMRA’s report shows the entire top 20 list for each investment.

According to Insurance News Net’s Bill Kenealy in “New York Life Upgrades Mobile Offerings,” high tech customers can access even more information directly from their mobile phones.  New York Life Insurance Co. has added even more options for mobile users of the Virtual Service Center (VSC).  Their VSC is a self-service online tool for updating and viewing information related to one’s accounts with New York Life.

Policy and account owners can obtain detailed information on their annuities and other life insurance policies directly from their mobile phones and even make changes.  Some of the different options include checking beneficiary information, premium payments, and cash value.  They can also transfer funds from one account to another, change their future payments, and even update the way their investments are allocated.

As soon as they login, the information will be automatically sized to fit their mobile device’s screen size and resolution.  New York Life is committed to providing their customers with the newest innovations in technology to make life simpler.  They can now access this information 24/7 from anywhere convenient to them.  Whether checking their annuity rates or confirming the amount of their premium payment, New York Life’s customers can do it all from their mobile phones.

In Jeff Benjamin’s Investment News article “Five ways to boost retirement income,” immediate annuities are at the top of the list.  The best way for retirees to make the most of the retirement savings they have built is to have diverse yet safe investments that will continue to generate income even in retirement.  By establishing a steady income stream that will carry you through rough economic times, you will be able to have the flexibility to manuever through assets with some risk to generate income in retirement.  Five investments that can help those of retirement age with their steady and reliable income stream are immediate annuities, individual bonds, reverse mortgages, convertible bonds, and master limited partnerships.

As the demand has increased for immediate annuities, they have become easier to understand for everyday investors.  A single-premium immediate annuity is one of the best ways to obtain guaranteed predictable income.  For investors who have already retired, the author recommends a simple no-load version without added riders like death benefits.  While your monthly income from the annuity may seem low, experts recommend using a portion of your retirement savings for an annuity and using that payout for everyday expenses.  Then the rest of your savings can be put towards other income growing investments.  New York LIfe, MetLife, Hartford, Nationwide, and John Hancock are some of the post popular insurance companies that work with annuity products.