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Lifetime income benefits propel indexed annuity sales

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When it comes to the feature that’s helped seal the deal most often in the past year, an overwhelming majority of fixed indexed annuity (FIA) sales pros cite guaranteed lifetime withdrawal benefits (GLWBs). Yet, looking toward the future, those same specialists say fixed indexed annuities that offer a combination of benefits will see a rise in sales.

Those findings came to light in a recent survey sponsored by Phoenix Companies Inc., which was conducted at the National Association of Fixed Annuities (NAFA) summit earlier this month. The firm canvassed more than 100 insurance marketing organization professionals, carrier executives and independent agents.

When asked what feature over the past 12 months was the “must have” ingredient for agents to sell an indexed annuity, 70 percent pointed to GLWBs, far ahead of the next most popular option, a choice of combination benefits (11 percent). Death benefit protection, principal preservation income riders, alternate index strategies or indices, premium bonuses and stacked roll-up riders each balloted at 6 percent or less.

Yet, when asked what feature or features would take on greater importance in the coming year, GLWBs still came out on top at 37 percent, but a combination of benefits moved up to 25 percent. Other popular choices included alternate index strategies or indices (11 percent) and principal preservation income riders (10 percent).

Mark Fitzgerald, national sales manager for Saybrus Partners, Phoenix’s distribution subsidiary, explained in a release detailing the survey results that while lifetime income remains a top priority for consumers and advisors alike, other preferences, such as accumulation and chronic-care benefits, are taking precedence as well, leading to the prediction that combination annuity products stand to increase in value.

What clients want

NAFA attendees were also polled on what their clients expressed a desire for when considering an annuity purchase, thereby shaping product design. Here again, the results nearly mirrored what the industry insiders voiced. The “need for guaranteed income in retirement” was picked by 62 percent of the respondents, followed by the “need to address multiple needs with one product,” cited by 24 percent. Third up was the “need to maximize their nest egg through accumulation products,” the choice of 10 percent.

What agents want

Queried about how they would design new FIAs, agents, carriers and IMO pros endorsed the addition of accumulation features (33 percent); income guarantees (28 percent); chronic care-benefits (24 percent); and other combination items (such as supplemental medical funding or final expense funding), which was cited by 11 percent. Death benefit protection was a distant fourth at 4 percent.

Over the next 12 months, respondents said that annuity manufacturers’ top priority should be crafting less complex product designs – 44 percent. Better illustration tools and improved mobile apps tied at 18 percent, followed by multiproduct platform solutions (13 percent) and flexible premium products (8 percent).

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