The future of the fixed indexed annuity industry has been in question since the DOL surprisingly included these annuities in their new fiduciary rule. There are multiple lawsuits filed against the Department of Labor by industry trade groups hoping that somehow fixed indexed annuities will be eliminated from the rule. If not, it’s expected that their sales will decrease over the next couple of years and that some insurers might shift their focus to traditional fixed annuity products. But Voya Financial still believes in indexed annuities and has even introduced a new line of products. According to Nick Thornton’s Benefits Pro article, “Voya rolls out new, less expensive FIAs.”
Voya Quest is the new line of fixed indexed annuity products. There are three different annuities that link to the S&P 500, have lower surrender fees and offer principal protection. You can choose a 5 year, 7 year or 10 year surrender period. There is also an option to add on a Guaranteed Living Withdrawal Benefit rider to guarantee a lifetime income stream. Voya believes that these new fixed indexed annuity products will appeal to a wide range of consumers.
When the fiduciary rule was first proposed, fixed indexed annuities and immediate annuities were included in the prohibited transaction exemption 84-24. The DOL surprised the industry in their final rule and included indexed annuity products under the Best Interest Contract Exemption guidelines. This means that advisors must act as fiduciaries to their investors. There are five lawsuits against the DOL’s rule saying that the Administrative Protection Act protects fixed indexed annuities from this rule. They allege that the FIA industry will be disrupted with this rule and that indexed annuity providers weren’t given a chance to comment on the rule because they initially weren’t included with variable annuities under the BICE guidelines.
Currently, 60% of the $54 billion in fixed indexed annuity sales comes through independent insurance agents. This channel will likely disappear after the DOL fiduciary rule begins because annuity providers are unable to effectively oversee independent agents and ensure that BICE guidelines are being followed. Broker-dealer and registered advisory channels will most likely pick up the sales that had previously come from independent agents. Sadly, it’s likely that thousands of small insurance businesses and independent agents will no longer exist. That’s the focus of one lawsuit. The President of annuities at Voya said that while they support the arguments in the lawsuits, they are not actively involved in or financially supporting them.
Voya focused their new products on the demands of distributors. They made them more flexible and reduced the surrender charges. The company said they are working closely with their distributors to adapt products and adjust to the concerns that stem from the DOL’s fiduciary rule. Voya’s President of annuities is confident that fixed indexed annuities will remain an important part of retirement planning despite what happens with the fiduciary rule. Americans need guaranteed retirement income and fixed indexed annuities can meet that need. The Voya Quest line of fixed indexed annuities helps consumers grow their retirement savings, protect it from market downturns, and create a steady income stream.
Written by Rachel Summit