Annuities Take Center Stage During A Crisis

The Annuity Man

Emil Hallez of Investment News put out a great article addressing how annuities become more prevalent during a crisis.

Click this sentence to be linked to the full article.  Below are some key excerpts from his piece.

"Nearly 30% of investors said they plan to decrease their level of risk as a result of the COVID-19 pandemic, according to a survey commissioned in March by LendingTree’s MagnifyMoney site.  Meanwhile, 32% said the pandemic will have no effect on their future investment decisions.  An additional 23% said they planned to keep money out of the stock market, and 21% said they would further diversify their portfolios, according to the survey results.  That report included responses from more than 1,000 U.S. investors.  For advisers, those indexed annuities are now paying smaller commissions, on average.   A handful of insurers have pulled their lines of fixed annuities entirely.  That followed an adjustment the Fed made to its target rate, bringing it to a more-than decade low of zero to 0.25%.  That made the holdings insurers use to back their products less effective, at least for the rates customers have sought.Unlike fixed annuities, indexed annuities do not have a guarantee for the annual yields on the principal base."

It's not all smooth sailing for annuity issuers, but they are in a good spot with over 10,000 baby boomer reaching retirement age every single day...and looking for contractually guaranteed solutions.  That's a demographic tidal wave of potential annuity buyers that need principal protection or lifetime income guarantees.  That's just a undeniable fact.

Stan The Annuity Man

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