What You Need to Know
- An income annuity converts a lump sum into a regular stream of income payments.
- The percentage of income annuity buyers choosing deferred benefits stream start dates increased sharply for the second straight year.
- More income annuity buyers are buying contracts that insure income for just one spouse.
Cannex Financial Exchanges Ltd. says the mix of income annuities sold changed dramatically between the second quarter of 2020 and the second quarter of this year.
The percentage of annuities sold with income streams starting 13 or more months in the future soared to 39% in the latest quarter. That was up from 33% in the second quarter of 2020, and up from 26% in the second quarter of 2019.
In the latest quarter, the average purchaser of a deferred income annuity set the benefits stream to start 7.8 years in the future, or around age 67.
The family situations involved also changed dramatically.
The percentage of income annuity purchasers who were protecting income for just one life, rather than two lives, increased to 67% in the latest quarter, from 60% in the year-earlier quarter. The percentage who were protecting income for two lives fell to 23%, from 27%. Other income annuity purchasers insured income for a specified, guaranteed period of time.