The focus of insurance company combination annuity and long term care activities since passage of the Pension Protection Act in August 2006 has focused on deferred annuity vehicles of all manner and shape.
This is not surprising, as this is the area where insurers have experienced the greatest success in the last 5-10 years and where most annuity product innovation has occurred.
That may be changing, however, as insurers recognize the nature of their next great frontier for retaining and expanding the revenue dollar resulting from qualified and non-qualified fund accumulations. This frontier involves retaining and garnering the highest amount of revenue during distribution phases.
A strong effort is taking place to identify, for Americans, the risk of outliving one's income. This effort is partly educational and partly enlightening, to change the mindset of retirees and near-retirees.
Ultimately, this will need to lead to product purchases by this vastly expanding market segment.
Consumer acceptance will likely be considerably greater and stronger if the new offerings not only provide for income flows as long as the annuitant is living, but also recognize the need to cover what may be called, broadly speaking, Part 2 of the retirement years.
Part 2 refers to the "frailty years," when either physical or mental infirmities (or both) necessitate the retiree's getting health care services.
It appears that the more successful sales will be those that help buyers address 2 or more critical post-retirement objectives.
Much analysis has already taken place to design LTC coverages that integrate with, and are superimposed upon, guaranteed minimum withdrawal benefits and other somewhat similar structures. The interest here, however, is to examine opportunities to integrate with immediate annuities, whether variable or fixed.
