Deferred income annuities (DIAs) are poised to pick up steam this year and next, solidifying their presence in the annuity marketplace due to their unique ability to protect against longevity risk.
A recent research paper by the Insured Retirement Institute (IRI) anticipates that DIA products will be the fastest growing annuity product in terms of sales on percentage in 2013 and 2014, after reaching an estimated $1 billion in sales during 2012.
The paper, “Deferred Income Annuities: Insuring Against Longevity Risk” found that Baby Boomers highly value products like annuities which offer them guaranteed income: the research found that one-fifth of Boomers called guaranteed income the most important aspect of a retirement investment product.
With advancements in the medical field constantly extending the average life expectancy — in 2012, among individuals who have reached the age of 65, life expectancy hit 83 for males and over 85 for females — protecting oneself from the possibility of outliving one’s assets has become a top priority.
IRI research found that 49 percent of retirees enter into formal retirement before age 65, leaving many Americans spending over 20 years in retirement. According to Census Bureau data, during the end of those years (when individuals are aged 80 and over), 71 percent had a disability, 56 percent had a severe disability and 30 percent required assistance with daily living.