Have you noticed the increased interest in annuity products this year? This increased interest is coming from both consumers and financial professionals.
Why is this happening? Why now? I think there are seven common sense reasons for this awakening. These reasons have their roots in demographics, the economic environment and recent product innovations. Let's explore the rebirth.
Here are the key areas where value is available for the buyer and financial professional:
1. The Demographic Steamroller Continues
The aging of the US population continues. There are 10,000 people per day turning age 65 and 16.5% of the population is now age 65 or older. By 2030 all baby boomers will be at least 65 years of age. This growing age cohort is moving from accumulating assets to protecting what they have and generating the most income from their capital.
2. Desire to Protect Equity Market Gains
Older individuals who have done well in the equity markets are looking for ways to lock in the gains they have generated. Moving the money from pure equity products into most types of annuities protects their principal, including the gains.
3. Tax Deferral
One of the intrinsic values of annuity products is the tax-deferred build-up of accumulated interest and product gains. With income tax rates likely to increase at the federal, state and local level tax-deferral is a very valuable characteristic of annuity products.
4. Risk Management
Annuities are an insurance product, and this is becoming better understood. Whether to protect principal, create guaranteed income streams or to take advantage of supplemental long-term care and death benefits these products are insurance.
One use that is increasingly common is to trigger guaranteed income streams as a hedge against sequence of return risks for other equity assets.
5. The Need for Sources of Protected Lifetime Income
Individuals cannot find sources of protected lifetime income that annuities can provide. The number of individuals with defined benefit pensions continues to decline.
Harry N. Stout has been the president of Fidelity & Guaranty Life, deputy chief executive of Old Mutual Financial Network, and managing director of Insurance Insight Group. He is also the author of 
