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Cogent survey: more investors in 2012 view annuities as critical to retirement strategy

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The number of investors who say that annuities are a critical part of a retirement strategy increased significantly this year over last, according to a new report.

Cogent Research, Cambridge, Mass., published this finding in a summary of results from a new survey, “The Evolution of the Annuity Industry.” Produced in partnership with the Insured Retirement Institute, Washington, D.C., the study examines the opinions and preferences of annuity producers and investors, explores factors driving annuity adoption and details what carriers can do to capitalize on the growing interest in annuity ownership.

The survey was administered to investors who are responsible for making household decisions and are at least 25 years old.

Nearly three-quarters of the annuity owners surveyed (73 percent) say they are more likely than not to agree that annuities are a critical part of a retirement strategy in 2012. This compares with a much smaller majority of annuity owners (55 percent) who viewed the products as a critical component last year.

Similarly, 17 percent of non-annuity owners say the products are critical to retirement this year, as compared to just 8 percent last year.

A solid majority (63 percent) of the investors surveyed “somewhat” or “strongly” agree that volatility in the financial markets makes them more likely than not to consider buying an annuity. A smaller majority of the respondents (53 percent) also say they would like to know more about the features and benefits of their annuity-based investments.

Annuity awareness among prospects, the report adds, is increasing due to rising word of mouth.

Most of the respondents (52 percent) learned about the products from a financial advisor. Smaller percentages gained awareness through family and friends (22 percent), financial institutions (11 percent) and TV/news (3 percent).

The ability to secure a guaranteed income remains the top reason for purchasing an annuity among 35 percent of survey respondents this year, just above the 34 percent who cited guaranteed income last year, the report notes. The other top reasons include advisor-recommended (26 percent in 2012 versus 27 percent last year), tax deferral (19 percent vs. 23 percent), principal protection (7 percent vs. 9 percent) and inflation protection (6 percent vs. 1 percent).

A near-majority of non-annuity owners (49 percent) surveyed say they somewhat or strongly agree that they’re “concerned that annuity providers cannon meet their guaranteed obligations. And 29 percent of non-owners indicate the media have had a negative impact on their impression of annuities.

Just 5 percent of the non-annuity owners are “very” or “extremely” knowledgeable about annuities, the report finds.


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