The Social Security Debate Bodes Well For Annuity Sales

These various features make it so annuity holders can optimize their risk and return, without tax consequences impeding their decision making process. And, after years of shifting allocation strategies, they can opt to annuitize and not outlive their funds.

This is a good time to be discussing these points. Earlier this year, the crisis facing future Social Security recipients prompted President Bush to form the Commission to Strengthen Social Security. The recommendations from the commission, due out in November, may include a provision that would allow the investing of up to 2% of ones Social Security taxes in private investments. Already, this concept, and the commission itself, is coming under fire from opponents as talks of administrative costs and market volatility are heating up.

This debate is providing the annuity marketplace with more publicity than annuity issuers could ever afford to buy.

For instance, those who have never put money anywhere but a savings account are now discussing Social Security and its future. Meanwhile, insurers are continuing to tout tax-deferral and annuitization, and to expand their asset allocation programs.

The result is, annuity companies are approaching the marketplace at the very time the government is blazing the trail and creating more knowledgeable investors.

All of this attention on investing dollars, market risk and guaranteed income for life is good for insurance companies–regardless of what happens with the final recommendations of the Social Security Commission.

It is good, because the public has become intrigued about the concept of controlling their personal financial future. Even if they dont get a hold of their Social Security dollars, they may opt to enter the annuity world, on their own accord with dollars from other sources.

This is a great opportunity to have conversations with your clients and take advantage of the very public and expected failure of the government in finding solutions to the Social Security dilemma.

Geri S. Rhoades is assistant vice president-marketing and conservation, retirement products and services, for Sun Life Financials U.S. operations in Wellesley Hills, Mass. Her email is [email protected].

Reproduced from National Underwriter Life & Health/Financial Services Edition, October 8, 2001. Copyright 2001 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.

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