Annuity FYI Blog

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.

No-load annuities are annuity products where investors are not charged commission fees because the investor controls the account.  During this tough economic climate there is an increased interest in these no load annuities.  Annuity FYI has added a section on these no-load variable annuities to the Compare Annuities section on its website explaining the product and listing the most competitive options out there for investors.  No-load variable annuities are usually sold to investors directly but can sometimes be purchased through brokers as well.  There are some fees associated with the product, but those fees are significantly less than load annuities and some load annuity fees are nonexistent with the no-load annuities.

One benefit that investors really like about no-load annuities is that they do not have surrender charges if you need to withdraw some money unexpectedly.  Of course you can still have penalties associated with the age you withdraw and tax gains.  The best no-load annuities have the same Guaranteed Income Benefit and Death Benefit options as loaded annuities.  One of Annuity FYI’s favorite products right now is Ohio National’s ONcore Wrap No Load Annuity.  It has both of those riders included.  No-load annuities are not right for every investor.  Since you are not paying commission to a broker, you are not getting the one on one advice and support associated with loaded annuities.  The products are best for investors that know how to monitor their own annuities and choose to do that in order to lower fees.