A player in the U.S. annuity distribution market says the individual annuity market really does look better now than it did just a few months ago.
Jim Lake, a vice president at the Guardian Life Insurance Company of America, heads the Guardian's life, disability insurance and retirement products sales operation. He took the heat as low interest rates and uncertainty about regulations pounded sales starting in mid-2016.
New survey reports from LIMRA, the Insured Retirement Institute and Look to Wink show that year-over-year decreases in annuity sales began to slow this past spring. Second-quarter results looked about the same as first-quarter results, and, in some cases, were a bit higher.
Lake said in a telephone interview last week that he believes the market survey reports give an accurate picture of the annuity market.
"It's been beginning to stabilize, and it's starting to grow again," Lake said. "I think everybody's excited."
(Related: Q2 Annuity Sales Look Better: IRI)
Guardian executives are more aware of the overall state of annuity products now than they were a few years ago, because they tried to prepare for the possible arrival of the U.S. Department of Labor's fiduciary rule by turning their company's agents into retirement income specialists, who could compare all available annuities that might meet a client's needs.
Some insurers have de-emphasized annuity sales, or pulled out of the market altogether, but, today, most of the remaining major players have made a commitment to stay in the annuity market, and the annuity contracts the remaining players are offering are as strong as ever, Lake said.
Crediting rates and guarantees may be leaner than they were 10 years ago, when interest rates were higher, and rates seemed likely to increase, but "the products are pretty darn good compared with what's out there," Lake said.
Meanwhile, Lake said, clients continue to get older and head toward retirement.
"Clients need these types of guarantees," Lake said.
Lake said he has a simple, two-party strategy for helping people, including colleagues at Guardian, understand how well they have really prepared for retirement.
He asks them, "How much lifetime guaranteed income do you have?" He tries to help them understand that some likely sources of income they have come with no guarantees.
Lake also asks people, "Have you taken the key risks off the table?"
He uses that question to help people think about how well they have protected themselves against longevity risk, long-term care risk, market risk and other, related types of risk.
Lake said he thinks annuity designers will be focusing on coming up with new ways to help workers and retirees generate lifetime income streams.
Some of the innovation will come in the markets for single-premium immediate annuities and other types of income annuities, he said.
He said product designers will also be thinking of new ways to make annuitization available to the participants in 401(k) plans.
Insurers will continue to offer built-in annuitization features and optional annuitization features, and they may also offer more stand-alone immediate annuity products to plan members, Lake said.
Many of the new 401(k) plan participant annuitization options will be employee-paid, but some may be fully or partly paid by the employer, Lake said.
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