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

In the Annuity FYI article, “From the Wreckage of the Financial Crash, Annuities Emerge as Market Safety Net,” Tristam Korten says that variable annuities singlehandedly saved many Americans’ retirement income.  Two market disasters between the decade of 2000 to 2010 saw millions of Americans lose more than half of their retirement savings in the financial markets.  The 2000 NASDAQ fall and the 2008 market collapse decimated stocks and other market investments.  One man interviewed for the article purchased variable annuities for himself and his parents after his parents lost 2/3 of their money in the collapse of 2000.  Just before the crash of 2008 he was able to secure their remaining retirement funds and his own through variable annuities.

Currently, 12% of the US population is 65 and older.  But by 2050, almost 21% of the US population will be 65 and older.  The strain that this will put on Social Security makes it an unreliable retirement source.  Since the traditional pensions that our parents and grandparents received to finance their retirement are mostly gone, there is a gap for retirement income that is increasingly becoming filled by annuities.  Your investment is usually insured from any loss and guaranteed a minimum rate of growth.  Fixed annuities have your fixed rate of return guaranteed in your contract.  Fixed equity indexed annuities link your return to a stock market index’s performance.  With variable annuities, underlying market subaccounts determine your rate of return.

Many financial professionals who were not fans of annuities at some point, believe that they are now excellent investments.  From the Director at Ohio National Financial Services to the director of financial security at the AARP, most financial experts agree that annuities should be a part of your retirement portfolio.  The payments received from an annuity after your initial investment are much like a pension actually.  Companies like Prudential and Ohio National have added additional annuity benefits to meet changing consumer demand.  The article cautions that while there are more than 15,000 annuity products in the market, many of those are not the best investments.  A financial advisor helped the man in the article grow back his own and his parents retirement savings through annuities.  But investors need to spend a lot of time and work with a reputable financial advisor before jumping into annuities.  The growth rate and principal protection of the right annuity products will carry many Americans through retirement.

According to “Taking off the glitz,” Darla Mercado of Investment News says that variable annuities are losing some of the benefits that made them so popular in the first place.  Many living benefit features were added and made more attractive last year in order to draw investors into variable annuities.  But since low interest rates make it more expensive for insurance companies to offer benefits like lifetime withdrawal benefit guarantees, some of the top sellers of variable annuities are offering less to investors.

Prudential and MetLife are two of the largest variable annuity providers and two companies that are pulling back on their benefits.  While Prudential used to base lifetime income on 6% compounded growth, they have lowered that to 5%.  They have also increased the amount of time investors must defer their annuity from 10 years to 12 years in order to receive their promised protected value.  MetLife has decreased the income annuity associated with the guaranteed minimum income benefit because of low annuity rates.

Advisors are not happy that the benefits they have been pleased to offer investors are being reduced and are looking to new companies for different variable annuities.  Ohio National Financial Services Inc. introduced a new 8% simple interest growth lifetime withdrawal benefit, available on your entire original payment.  Thomas B. Hamlin of Somerset Wealth Strategies is pleased with the annual reset and 8% growth offered by Ohio National.  Transamerica Corp.’s Retirement Income Choice 1.2 rider and their withdrawal benefit are other good annuity choices right now.

The article lists other good benefit options from Protective Life Insurance Co. and Jackson National Life Insurance Co.  It is suggested that Jackson may move up to be the top seller of variable annuities now.  MetLife and Prudential still have a lot to offer in the variable annuity market as well, even with trimmed down benefits.  The moral is that variable annuities are not “one size fits all” and really must be customized to the individual investor and their needs.

According to a company news release, Ohio National Financial Services has elected a new President and CEO.  Gary T. “Doc” Huffman, CLU, ChFC, will take control of the life insurance and annuity company starting December 1 of this year.  Ohio National celebrated their 100th anniversary this year and Huffman will be the 9th man in charge of Cincinnati’s #1 Top Workplaces in the large company category.  He has worked at Ohio National over two years after decades in the financial industry in other positions.  As the Chairman, President, and CEO of Union Central Life Insurance before coming to Ohio National, Huffman has a wealth of experience and knowledge.  He plans to expand the company’s marketplace position, which is already exceptional.  Their competitive portfolio of products, consumer satisfaction and value, and excellent financial strength should only improve under Huffman.

Ohio National has never succumbed to layoffs in their 100 year history and is in the midst of a 20 year record for growing their life insurance sales.  They are the only company to have a strong industry record.  Ohio National had more than $28 billion of assets being managed as of September of this year.  They are proud that they have maintained excellent ratings from all of the financial ratings companies for close to 20 years, even through 2008′s recession.  With 40,000 representatives selling financial products in almost all of the United States, Ohio National has some of the best annuities and life insurance products on the market.  They are also an active donor to Cincinnati charities including Habitat for Humanity.  Huffman’s predecessor believes that Huffman has what it takes to bring Ohio National into the future maintaining and growing the company’s successes.

Ohio National will keep its ‘A+ Superior’ rating from A.M. Best, according to an Ohio National Financial Services news release.  The rating is based on the strength of their balance sheet, their business profile, and their operating performance.  This is the second to highest rating on A.M. Best’s 16-part scale.  Not only did Ohio National receive this ‘A+ Superior’ strength rating, but their rating outlook was upgraded to ‘stable’.  In a review of the company’s 2009 finances and operations, Ohio National was found to have some of the best annuities, as well as “strong risk-adjusted capitalization, positive net operating gains in 2009, and the improved position of its investment portfolio.”  They also had some strong increases from 2009 to the first quarter of 2010.

The other major financial rating companies also praised Ohio National’s financial strength this past April.  Standard & Poor’s reaffirmed their ‘AA’ (very strong) rating for the company’s ability to pay out claims.  This rating is S & P’s third-highest out of their 21-point scale.  Moody’s Investors Service maintained Ohio National’s ‘A1′ rating for insurance financial strength.  The ratings for Ohio National’s financial strength and ability to pay claims have not changed since 1991, which shows the company’s rock solid stability.  National Security Life and Annuity Company, Ohio National’s New York subsidiary offering variable annuities, received an ‘A Excellent’ rating which is the third highest possible.