RJ and Makay

Annuities companies may gain a better understanding of specific annuities markets after reading LIMRA’s recently released Guaranteed Income Annuities report. The publication examines over 55,000 immediate annuity contracts issued in 2008 and 2009.  Interesting findings in the report include:

• Women buy six of every 10 immediate annuity contracts, which is a significant share of the $250 billion annuitization market.
• The average age of persons who purchased immediate annuities is 73.
• When pre-tax money was used to purchase immediate annuities, the purchase was more likely to be made at the onset of Social Security benefits or IRS required minimum distributions.
• The average immediate annuity premium came to just over $107,000.
• Seven out of 10 buyers of immediate annuities purchased lifetime guaranteed income contracts.
• Nine out of 10 lifetime income annuity buyers selected payments that were guaranteed for a certain period of time or offered a refund guarantee that allowed beneficiaries to recoup some or all of any premium that remained.
• 93% of income annuity contracts have no automatic payment increase.
• Annual fixed immediate annuity sales will increase to over $12 billion by 2014.

The fear of losing control of their money once presented one of the biggest obstacles for potential clients to buy an immediate annuity. Matt Drinkwater, associate managing director, LIMRA retirement research, says “Today, our research shows it’s not an all or nothing decision. Two thirds of the contracts allow annuitants to convert a portion of remaining payments to cash, if necessary,”