A review of recent annuity debuts suggests that the ballgame certainly isn’t over where new annuity development is concerned. That should be of interest to annuity professionals who have been worrying about a lack of new products until interest rates and the economy rebound.
In the past few weeks, a number of annuity carriers have brought out new annuity contracts or features that are geared toward meeting the needs of retirement-minded customers. This is happening in both the fixed and the variable markets.
Gone is the glittering talk about better-than-CD interest rates and tantalizing retirement income rollup provisions. The new products offer detailing that is conservatively modern in a post-recessionary kind of way, but the focus on retirement is unmistakable.
Frankly speaking, the carriers want to hit retirement home-runs.
Leon LaBrecque, who is CEO at LJPR in Troy, Michigan, believes thinking is changing on product-focused transactional sales. “The old annuity approaches won’t work anymore,” he explains.
As a registered investment advisor, his firm is treating annuities as an asset class, particularly for those in seeking retirement solutions, particularly guarantees and income.
“We recommend annuities when the client wants something that stabilizes retirement income, or that guarantees interest for accumulation purposes,” LaBrecque says. “We treat annuities as part of the solution, not just a product to sell.”
The work is advisory-focused, not sales-focused, he adds, and the annuity advice his firm provides is geared toward retirement needs rather than accumulation.
The new annuities that are coming out seem to reflect that. Even though the carriers are different, and the product types are different, the group-think is just going in that direction. A few examples follow.
One example is ATHENE Benefit 10, fixed indexed annuity from Athene Annuity & Life Assurance Company, Greenville, S.C., that has an enhanced benefit rider offering up to five benefits, all funded by a benefit base account.
Here’s the point: The five benefits are keyed to retirement concerns. They include a guaranteed lifetime withdrawal benefit for a retirement income stream; a 50 percent enhancement on income in event of inability to perform two of six activities of daily living on a permanent basis; a five-year payout of the rider’s benefit base if the client experiences long-term care confinement or terminal illness diagnosis; and a death benefit if money remains in the benefit base account at the time of the annuitant’s death.
Because it’s an indexed annuity, the contract does include two indexed accounts. Both link their interest crediting to the S&P 500. But it also offers a fixed account with a five-year guaranteed rate, a nod to those who want both retirement benefits and guaranteed growth. There’s a 6 percent premium bonus, too, which vests over 10 years, and the enhanced benefit rider includes early income bonus of up to 10 percent if the person begins lifetime withdrawals before the eighth contract anniversary.
Another example is a deferred income annuity (DIA) from Massachusetts Mutual Life called MassMutual RetireEase Choice. The policy is a flexible premium contract that guarantees a specific amount of future income.
The payouts can start as soon as 13 months after issue. But the carrier says the policy is really designed to help meet the predictable income needs several years hence. In other words, this is a product for the advanced retirement years, folks.
Unlike traditional deferred annuities, this annuity provides no contract value or withdrawal provisions. But in return, the policy can guarantee a higher income amount at time of purchase payments than can traditional deferreds, the company says.