End of Life for Annuity Guarantees?
Mantissa Group just concluded a 5 Part series on Annuities (See: Mantissa Research), and we are convinced product design will define the future of this industry. We also believe that product design changes will have a equally significant impact on the life insurance agent. In a recent post by Harry N Stout, author of FinancialVerse Personal Finance, he comments on how perpetually low interest rates will gradually influence Life and Annuity product design with a slow but steady diminishing of life and annuity guarantees. As he indicates, we see it across the spectrum of annuity and life insurance product solutions – lower initial interest rates, lower guaranteed minimum rates, and carriers withdrawing products or from product lines.
We believe that a significant benefit of Annuities is the rich guarantees for lifetime income for a consumer/retiree. If this benefit is gradually taken away or made less attractive, both agents and consumers will need to find alternative and adjust to this new economic reality. More to come, and we will be watching this closely