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Income Annuities Bright Spot In 1st Quarter, Predictions for the Second?

On the cusp of the second quarter ending, I’m going to recap some of the first quarter annuity sales from earlier this year.  In Financial Advisor’s “Deferred Income Annuity Sales Reach Record High” earlier this month, Beacon Research’s CEO talks about how deferred income annuities were definitely the highlight of the quarter for annuity products overall.  It was the fifth consecutive quarter that deferred income annuities had an increase to a sales total of more than 150% higher than last year at this time.  It’s been important for consumers, and therefore advisors, that annuity products guarantee retirement income.  Sales of deferred income annuities have been increasing because of the consistent product development meant to meet consumer demand.  Total income annuity sales increased by 1.4% year over year.

Low interest rates continued to impact the annuity industry in the first quarter, as they have this quarter as well.  Fixed annuity sales of $15 billion in the first quarter were a decline of 11.7% from last year.  But the fixed rate market value adjusted products saw just a small decline, hinting that consumers are willing to take on a little interest rate risk in order to get a higher credited rate.  The top five fixed annuity sellers in the first quarter were Allianz, Security Benefit Life, New York Life, American Equity, and Jackson National.  Beacon predicts the second quarter annuity sales to remain consistent with the first quarter sales as low interest rates remain.  Indexed and income annuities had a record year in 2012, so there may still be some slight increases following those records.

The top five fixed annuities for the first quarter included four indexed products and one income annuity.  Security Benefit Life had the number one and number three top selling product with their Total Value Annuity and Secure Income Annuity indexed products.  New York Life’s NYL Lifetime Income Annuity came in second place.  The indexed annuities in the fourth and fifth spot were American Equity’s Bonus Gold and Allianz Life’s Endurance Plus.  As we wind down the second quarter of 2013, we’ll have to wait a few weeks to see what changes there were in income and indexed annuity figures and if the forecasts for the quarter hold true.  One thing is for certain, annuity products are fighting in a tough economic and low interest rate environment.  The guaranteed lifetime income they offer is keeping them around.

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