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New Variable Annuity Focuses On Tax Efficiency, Lifetime Income

Lincoln Financial Group said that the departure and scaling back of other insurance companies in the variable annuity market has actually helped them. They have increased some pricing and cut back on benefit options so that they don’t get themselves into a financial bind. Companies that offered big benefits for little prices before the financial crisis started in 2008 had to back away from variable annuities because they lost money when interest rates declined sharply. This left a hole in the variable annuity market that Lincoln Financial was happy to fill. Insurance News Net’s Cyril Tuohy talks about how Lincoln is filling that void in “Lincoln Financial Launches New VA.”

Their newest variable annuity is called the Lincoln Investor Advantage. It’s main goal is helping advisors find a product that will increase their clients’ tax efficiency. The Lincoln Investor Advantage offers both traditional and alternative investment classes for your assets. Lincoln found that investors in retirement felt that they had underestimated how much their retirement investments would be affected by taxes. For that reason, they created this new variable annuity that will help to manage the growth and asset protection of clients’ money during retirement and in the years leading up to retirement. Investor Advantage has 125 different investment options for clients. There are also wealth transfer options and a lifetime income distribution available. Many variable annuities are no longer offering lifetime income options, so this a big benefit from Lincoln Financial.

MetLife and Prudential, two of the largest players in the variable annuity market, have really scaled back on variable annuities in the past couple years. In the first quarter of this year, Lincoln Financial sold more than $3 billion in variable annuities. They went from having the 5th highest VA sales in the first quarter of 2013 to the 3rd highest sales in the first quarter of 2014. This is despite the fact that their sales actually went down a little bit quarter to quarter. Total variable annuity sales decreased 6.4% from the 4th quarter of 2013 to the 1st quarter of 2014. Sales were down 3.7% when comparing both first quarters. Increasing interest rates have led to more interest in fixed annuities, so that has put a dent in variable annuity sales. But Lincoln Financial’s CEO believes that with the plethora of Baby Boomers retiring and searching for secure income, variable annuity demand will stay strong.

Written by Rachel Summit

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