Overall annuity sales climbed to $240.3 billion in 2011, an 8 percent jump from 2010, reports LIMRA. What makes these products so popular? And what products and/or features do consumers crave? Here's a look at what's hot in annuities.
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Paychecks for Life
Many retirees and pre-retirees have entered or will enter retirement without a private pension. So where do they get a pension-like check in their Golden Years? An annuity with guaranteed lifetime income benefits is one way. This feature is a popular choice by buyers of both variable annuities and fixed index annuities. As much as investors appear willing to pay extra for annuities with living benefits to cover their lifetime income needs, annuity providers appear just as driven to manage the risk associated with offering those guarantees more effectively. Lately that's been the case, with insurers adjusting living benefits to put more risk, or more costs, or more investment restrictions on the investor.
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It's a Wrap
Variable annuities that wrap around qualified assets, like IRAs, are gaining traction in a fitful economy. In fact, sales of VAs in a qualified setting now outpace sales of nonqualified VAs by about two to one, according to the Insured Retirement Institute. Meanwhile, an estimated 60 percent of VA contract assets now reside in qualified accounts. As more investors and advisors evidently see the merits of using an IRA-based variable annuity as an insurance wrapper around their qualified money, insurers are taking direct aim at that segment with a growing variety of IRA-tailored offerings designed specifically to capture qualified retirement plan money that currently resides in 401(k) and 403(b) retirement accounts.
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