Industry Expert Marrion Reports Index Annuities Are More Competitive Than They Have Ever Been

August 23, 2011

Industry Expert Marrion Reports Index Annuities Are More Competitive Than They Have Ever Been

St. Louis MO, 23 August 2011 -- The summer issue of Advantage Compendium highlights the reasons why index annuities continue to be very competitive in these difficult times. The edition compares index annuity competitiveness on a financial level examining returns of annuities, securities and certificates of deposit, as well as looking at the behavioral reasons that make index annuities so attractive to consumers.

“Compared to the start of the year the stock market was up 6% towards the end of July, but just two weeks later was down 11%. These kinds of ups and downs are great for bungee cord jumping, but not for savings. And a saver can’t count on the bank either – if a retiree was getting $1,000 a month in interest from their 1-year CDs in 2006 they’re now generally getting $112 a month from that same CD. Index annuities are more competitive than they have ever been, based on a comparison with the rest of the choices,” said Jack Marrion.

Key Points:
* An annual point-to-point index annuity with a 4% cap always produced a higher yield than current 5-year CD rates when looking at hypothetical calendar 5-year periods going back 50 years – a 3% cap beat the CD 80% of the time.
* “If people dressed like they invested we’d see the average person finally wearing their winter coat on Memorial Day, and getting out shorts and sandals in time for their Maine Thanksgiving.” The study confirms investors continue to “buy high – sell low.”
* The model shows in the median 20 year period $100,000 invested in the typical equity index fund would have grown to $947,549. By contrast, $100,000 invested by the typical mutual fund investor grew to $214,937.
* Is 2½% the new Wall Street “safe withdrawal rate” (and additional reasons why annuities with lifetime income benefits are so appealing).
* The 2 annuity messages that 60% of seniors felt were the most convincing reasons to buy an annuity.

* Why “zero is your hero” doesn’t always work and the behavioral ways to explain index annuity interest.

The quarterly research newsletter Advantage Compendium is published by Advantage Compendium, Ltd.
Advantage Compendium Ltd. provides research and consulting services to insurance companies and financial firms in a variety of annuity areas. Recent assignments helped carriers decrease outgoing annuity exchanges by creating a retention system, taught how to increase annuity production using behavioral sales training, and helped a carrier in designing a new annuity product.


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