The big trend in the annuity industry for 2012 will most likely remain the big trend in 2013, not surprisingly. Advisor One’s Danielle Andrus spoke with Doug Dubitsky of Guardian Life Insurance about the guaranteed income trend. In “Guaranteed Income Will Lead Annuity Industry in 2013,” Dubitsky said that this is the best time to be offering products with guaranteed income. This is because traditional pensions are difficult to find and social security is unlikely to cover a lifestyle similar to the one you have now. It drives me crazy that it took such a financial crisis for people to truly realize the importance of lifetime guaranteed income, but I guess as long as they are there now I should let it go!
Variable annuities were hit hard with a combination of low annuity rates and volatile equity markets. Benefits had to be changed by companies like Guardian, as well as many others. While customers were unhappy because they felt that they were losing benefits, Dubitsky reminds us that your benefits have to be looked at in the economic environment in which we currently exist. What is viewed as a good benefit now may not have been ten years ago and may not be in ten years from now. But the guaranteed income being offered now is crucial for investors looking to protect themselves from outliving their savings.
There has never been a time that guaranteed income wasn’t a good benefit. But guaranteed income is essentially boring and isn’t as exciting as stock market gains and other investment wins. The economy has proven what can happen when it’s at its worst and shown investors that stock and home prices don’t always increase. Now they realize the benefits of having their money in an annuity. Although it isn’t glamorous, they need the guaranteed income benefits, especially in this kind of economic environment. Slowly, consumers are losing their fear of annuities, but it is still the biggest barrier facing financial advisors. I get that people are scared of annuities; they are confusing and you really need to understand them to buy them. But once they are explained in a down to earth matter, most annuity products are understandable and the fear disappears. Give your advisors a chance to explain them.
Retirement saving and planning can seem like an impossible task for many people, so guess what they do? They do nothing which gets them nowhere. If you find an advisor and let them explain a path that will help you save for retirement and achieve guaranteed lifetime income, a weight is lifted off of your shoulders. Guaranteed income through annuities is a trend that will likely continue through 2013. Guardian’s Dubitsky sees another trend on the horizon. He thinks that advisors will spend more time helping younger people plan for for their retirement through income planning. Once this happens, the asset gathering closer to retirement will be a breeze for those who planned ahead while they were younger.
Written by Rachel Summit
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