New LIMRA Study Examines U.S. Deferred Annuity Buyers Attitudes and Behaviors
WINDSOR, Conn., Aug. 8, 2012—According to a new U.S. LIMRA study, 75 percent of variable annuity buyers, 83 percent of indexed annuity buyers and 86 percent of traditional fixed annuity buyers are satisfied with their deferred annuity purchase.
“We are very encouraged to see so many satisfied annuity buyers,” said Joseph Montminy, LIMRA assistant vice president, annuity research. “Of those who are satisfied, two-thirds of the VA households (61 percent for indexed and half for traditional fixed) own two or more annuities. In addition, our study found that five of six deferred annuity buyers would recommend an annuity to their friends or family. With this knowledge, advisors can organically grow their businesses by periodically contacting their existing clients who have purchased annuities.”
LIMRA’s study finds that the top reason consumers gave for buying their annuity is to supplement their Social Security or pension income. The second most popular reason is to accumulate assets for retirement; this is especially true for individuals under age 60. Receiving guaranteed lifetime income is also a concern, especially for buyers aged 60 and older. Annuity buyers’ single most important financial objective is to have enough money to last their and/or their spouse’s lifetime. This is not surprising given that only about one in four annuity buyers are very confident that their assets will last throughout their retirement.
“Knowing they will have sufficient assets and income in retirement continues to concern consumers,” noted Montminy. “But the recent economic crisis and continued market volatility has made guaranteed income more valuable to consumers.”
The study also revealed that the financial strength of the insurer is very important to all annuity buyers. Seventy-one percent of VA buyers said the financial strength of the company was very important when purchasing an annuity; 68 percent of indexed and traditional fixed annuity buyers also place a company’s financial strength at that level of importance. These findings offer companies great insight into how to both market themselves to potential deferred annuity buyers, and differentiate themselves from their competitors.
The study, conducted in the third quarter of 2011, surveyed 1,200 consumers, age 40 or over, who purchased a retail deferred annuity within the past three years.
LIMRA, a worldwide research, consulting and professional development organization, is the trusted source of industry knowledge, helping more than 850 insurance and financial services companies in 73 countries increase their marketing and distribution effectiveness. Visit LIMRA at www.limra.com