3 annuity industry innovations you should know about

CUNA Mutual Group is no exception. The company recently launched its ZONE annuity app to present investment options for CUNA Mutual Group’s new, registered index annuity, MEMBERS Zone Annuity, using easy-to-understand terms and visuals. It also helps advisors get a better grasp of features associated with the product. To say it has helped is an understatement.

Mobile application usage among licensed advisors increased more than 400 percent in the last quarter of 2013, and the bounce rate was reduced by more than 50 percent from existing apps. Sales of the MEMBERS Zone Annuity reached $22 million in the first month after launch, with first-year sales exceeding target by more than 300 percent for 2013.

Lincoln Financial has also gotten into the game with the launch of its “Lincoln Annuity Visualizer,” a Web-based app developed to help advisors “visualize” and demonstrate their clients’ needs for retirement income. The app incorporates hypothetical situations and case studies to help wholesalers and advisors quickly explain the various options available to their clients.

Even with these innovations, the life and annuity industry remains behind the times. A recent Celent research study noted that while the startup phase of P&C consumer-facing mobile apps has progressed rapidly, the startup phase for life insurers will take much more time to develop. With more and more consumers – especially those in the higher income bracket – downloading and using mobile apps, and more and more using mobile apps to manage their banking and personal finance activities, annuity issuers may want to increase their presence in the underserved annuity mobile app sphere.

Deferred Income Annuity

DIAs apply the concept of a longevity annuity to better meet the needs of pre-retirees for guaranteed income when they retire. They allow buyers to convert a lump sum into a pension-like series of payouts for life. They work in contrast to an “immediate” annuity, which starts issuing checks almost instantaneously, a deferred annuity requires owners to pick a start date for payments – usually from 13 months to 40 years or longer.

“Longevity annuities were a product that academics loved, but no one really bought,” said Dave Simbro, senior vice president of life and annuity at Northwestern Mutual. “Addressing DIA needs of a younger market also created the opportunity for more innovative product design. Thus, we launched our DIA product: Portfolio Deferred Income Annuity.”

According to the LIMRA Secure Retirement Institute, year-over-year sales growth of the product jumped 113 percent in 2013. Though the DIA is still a diminutive player when compared to the total premium volume of the annuity industry as a whole, there remains rapid growth – and confidence in the future of the product.

“DIAs are going to take more market share from income riders because they are easy to understand by the client – and the agent – they are transparent and efficient. In addition, the big carriers play here – New York Life, Guardian, Mass Mutual, Northwestern Mutual, Lincoln, etc. The name recognition game alone will drive the train,” said Haithcock.

“The innovation that exists in deferred income annuities today comes from the product’s flexibility,” said Ross Goldstein, managing director, New York Life. The company offers the “Gauranteed Future Income Annuity,” which affords consumers the flexibility around how they fund the product, the ability to change their income start date, riders that provide a money back guarantee, inflation protection and the ability to accelerate payments if cash is needed for an emergency.  

New York Life pioneered the innovation in this category in 2011 by turning what was once mistakenly referred to as “longevity insurance” into what pre-retirees now see as their own “personal, pension-like product offering higher payouts than any other income strategy on the market, and one that provides a more sustainable, fulfilling retirement,” said Goldstein.