“I hate annuities!” trumpets one mass marketing money manager. Other critics look down on tepid yields and what seems like high fees. Yet US consumers invested $133 billion in fixed and fixed index annuities last year. What do they see that the critics don’t?
A recent Kehrer Bielan study commissioned by Eagle Life Company provided some visibility into what attracts consumers to fixed and fixed index annuities. We analyzed data from the MacroMonitor, the large-scale national sample survey conducted every other year by the Consumer Financial Decisions Group of Strategic Business Insights since 1978. The current survey was conducted during 2018 and published in 2019 and encompasses 4,100 households.
While annuities are often marketed with a focus on bells and whistles such as exotic indexes and riders, consumers clearly turn to them for tax advantages. Half of index annuity owners say they were attracted by its tax deferral features. Over one-third of fixed annuity owners agree.
Source: Consumer Financial Decisions, MacroMonitor
The next most popular reason for investing in a fixed or fixed index annuity? Guarantees. A guaranteed stream of income payments and guaranteed interest all were cited by a substantial number of annuity investors.
Half of all US households say that tax advantage investments are very important to them, but households attracted to annuities are even more likely to find tax advantages compelling. And the lion’s share of US households is looking for guarantees. That outlook is even more prevalent among fixed and index annuity owners.
Source: Consumer Financial Decisions, MacroMonitor
The lesson for advisors looking to meet the needs of most investors? Stress the core features of fixed and fixed index annuities, rather than the wrinkles that differentiate one product from another. Critics might not respect annuities, but the public does.
Click here for your complimentary copy of the study, Fixed and Fixed Index Annuities Get No Respect.
About Eagle Life
Eagle Life Insurance Company is a provider of fixed and fixed index annuities marketed through broker-dealers and banks. The company is a wholly-owned subsidiary of American Equity Investment Life Insurance Company®, headquartered in West Des Moines, Iowa. Eagle Life is committed to providing products with integrity as well as superior service to the representatives it partners with and their clients. Renewal rate integrity is fundamental for maintaining these relationships. Eagle Life stands behind its renewal rate consistency and proudly publishes its rate history. For more information, please visit www.eagle-lifeco.com
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