Welcome to the post-meltdown insurance market, where guarantees are golden—and priced accordingly; where volatility is a four-letter word for investors and insurers alike; where de-risking has become an imperative for many insurance companies; where investors value downside risk protection as much or more than upside potential; where insurers are tossing aside old pricing models and embracing new, more flexible schemes.
Needless to say, keeping up with the latest supply-side developments with annuities is a major undertaking. To help you stay a step ahead, here’s a look at some of the products and features that have insurance industry observers buzzing.
Staying abreast of the many complex new features and designs insurers are rolling out as they attempt to de-risk their annuity portfolios while keeping their products relevant is no easy task. Just ask John McCarthy, Morningstar’s product manager for annuity solutions.
“I think we set a record for man-hours spent reviewing one [annuity contract] benefit,” a new long-term care option that a carrier unveiled recently with one of its annuities, says McCarthy. “In terms of the volume of activity and complexity, it’s getting harder for advisors to keep up” with annuity product changes. The average variable annuity product prospectus, he notes, now runs 125 pages.