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Entering Annuity Market Now With A Clean Slate

Although there have been some large insurance carriers leaving the annuity market recently, those who remain think that annuities are going to remain important vehicles for guaranteeing lifetime income.  The Financial Planning article by Katie Kuehner-Hebert asks “Is There Enough Capacity in Annuities?”  There are definitely challenges because of low interest rates, volatile markets, and capital constraints. This makes it imperative for companies selling annuities to be careful with their decisions.  They work hard to find a balance between the interests of both their customers and their shareholders.  A vice president at Prudential Annuities says that the life insurance industry always bounces back from difficulties and ensures us that multiple studies have shown increases in the demand for annuities.

At the Insured Retirement Institute’s annual meeting in San Diego this week, there is a lot of talk about annuities.  People are searching for ways to achieve guaranteed lifetime income and annuities are the product there to meet those needs.  Annuities offer certainty that your income will last for the remainder of your life, whereas systematic withdrawals really only offer hope that your money will outlast you.  Lincoln Financial Group’s CFO says that annuity demand has remained steady for the past ten years.  He says that as guarantees from employers and the government offer less to retirees and a huge portion of the population is nearing that age, annuities are more important than ever.

Some believe that where others have left the annuity market, new companies will take their place because there is still demand out there.  Forethought Financial Group recently began selling annuities and thinks that other new additions will join them in their new endeavor.  With their purchase of Hartford’s annuity business, they believe they will get a good return on their purchase through solid management of risk.  Forethought’s first variable annuities will be offered sometime in 2013.  Although products are constantly changing and being tweaked, they don’t think that many more large-scale changes are going to happen.  This could be a great time to come into the annuity market with a clean slate and a clear head and offer products that work now.  In short, the capacity is still there in most opinions.

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