Women are consistently outliving men,
often by years and even decades, giving rise to new concerns with
outliving their savings in the midst of a wildly unpredictable
equities market.

Enter fixed immediate annuities – a
tried-and-true retirement product that fell out of vogue only to be
revived as insurers begin to address women directly on the issue of
longevity. Because of increased life expectancy, US women are faced
with financing a substantially longer retirement than men – a
healthy 65-year-old woman has a 50% chance of living beyond age 88
and a 25% chance of living beyond 94.

A recent report from consulting and
professional development organisation LIMRA indicates that more
than half of middle-income women surveyed felt unsatisfied with
their current financial situation and uncertain about their future
financial needs. Even more worrisome is that almost a third of the
women surveyed do not know how to achieve their financial
goals.

“What’s striking is that consistently, women in
the middle market expressed more concern about their financial
well-being than men did,” said Nilufer Ahmed, senior research
director of LIMRA Markets Research.

“The recession has been hard on middle-income
Americans, with many indicating that they have not made any
progress or that they have fallen behind on their financial goals.
Yet, the women we surveyed seemed to be more receptive to listening
to financial services representatives for the tools and advice
needed to achieve their financial goals.”

 

How well do you really know your competitors?

Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.

Company Profile – free sample

Thank you!

Your download email will arrive shortly

Not ready to buy yet? Download a free sample

We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form

By GlobalData
Visit our Privacy Policy for more information about our services, how we may use, process and share your personal data, including information of your rights in respect of your personal data and how you can unsubscribe from future marketing communications. Our services are intended for corporate subscribers and you warrant that the email address submitted is your corporate email address.

Quote from Nilufer Ahmed, LIMRA Markets ResearchKey financial
goal

LIMRA research found that 9 in 10
middle-income families consider having adequate life insurance
coverage to be one of their financial goals. While a third of all
respondents felt they had not achieved this goal, women were more
likely to feel this way than men.

Married women, in particular, tend to believe
that their households need more life insurance coverage compared to
married men. The research also revealed that women (51%) are more
likely to favour an annual or biannual insurance check-up than men
(44%).

Saving enough for retirement is a concern for
women and men alike, but 54% of women, compared with 49% of men,
feel like they are not saving enough.

That is why fixed income annuities are ideal
for women worried about having and maintaining sufficient
retirement income. Among the most effective marketers of income
annuities to women is New York Life Insurance Co, which recently
reported that 64% of its $1.9bn in fixed immediate annuity sales
were made to women.

“Women are making a wise decision to actively
ensure their retirement income needs are in place and the financial
strength and peace of mind that come with this New York Life
product is what they seek,” said Angela Kyle, senior-vice president
in the company’s Retirement Income Security division, in a
release.

“Research has continued to identify the
increased need among women to be proactive about planning for their
financial needs in retirement. It is gratifying to see that women
are heeding this guidance and when ready to make the choice, a
significant number pick New York Life.”

An academic paper co-sponsored by the insurer
entitled Lifetime Income for Women: A Financial Economist’s
Perspective
, revealed that women’s increased longevity and the
continued demise of traditional pensions put them at risk of
outliving their assets.

The study found that traditionally women were
advised to invest in high-risk products to get higher returns to
sustain them through retirement. But lifetime income annuities,
which guarantee payments no matter how long an individual lives,
were a safer alternative, with a lower cost and less risk.

 

Deferred income annuities

Also hot are deferred income annuities,
a newer type of annuity that is essentially a cross between a
single premium immediate annuity and a single premium deferred
annuity.

The traditional single premium annuity begins
paying an income stream within 13 months of deposit, and it makes
these payments for either a designated period or for the lifetime
of the annuity holder. A deferred income annuity, on the other
hand, offers an income option inside the contract.

Clients who need a fixed amount of retirement
income for a certain period of time would pay a smaller single
premium under the deferred income product than under a traditional
single premium product that is annuitised for the same designated
period, leaving assets in the portfolio free for other
purposes.

The Guardian Insurance & Annuity Co, Inc
split the difference, launching a new single premium fixed
immediate annuity to its suite of retirement annuity products. The
Guardian Guaranteed Income Annuity enables individuals to convert a
portion of retirement assets into a steady payment stream that can
last their lifetime or for a specific period of time, if they
choose.

“For many individuals, retirement plans help
them accumulate savings, but once retired they face retirement
income risks they may not be prepared to meet,” Douglas Dubitsky,
vice-president for product management and retirement solutions at
The Guardian told LII.

“Their steady paycheck may be ending and needs
to be replaced. The stream of annuity payments provided by single
premium annuities are guaranteed to last for the amount of time
customers choose.”

The Guardian Guaranteed Income Annuity allows
individuals to receive payments as early as the first month after
the contract is issued by electing one of several annuity payment
options.

These options determine the length of time
individuals receive the guaranteed payments as well as the method
used to determine the amount of the payment.

Interest in income annuities is growing,
reflecting a need for more financial self-reliance at a time when
pensions are disappearing and there’s increased anxiety about
whether savings will survive a volatile stock market.