According to “Immediate annuities, whole life are likely to gain favor,” Darla Mercado of Investment News says that as baby boomers age they are looking for insurance products that offer them income. As these baby boomers approach retirement, they want reliable streams of income that won’t fluctuate with the markets. Immediate annuities offer the benefit of a guaranteed cash flow to cover necessary expenses. Since the amount of the income stream is known, they can count on this money to pay their bills and feed them.
Whole life insurance policies are also gaining steam because financial advisers are trying to find a fixed-income alternative that will still perform well for their clients in this environment of low interest rates. The “10-pay” whole-life policies are popular for clients under the age of 45. Many companies offer this product which requires clients to pay all of their premiums within 10 years. It can reduce out-of-pocket costs for term life insurance and allows clients to pay for a much shorter period of time.
The current insurance trend is to use the annuity in the supporting but still crucial capacity of guaranteeing income in the future. Variable annuities have overtaken the fixed annuity in popularity, but they seem to swap places every year or so depending on the markets. Demand is out there for new developments in the variable annuity industry and they are slowly creeping in. Some of the benefits of fixed annuities are being added to variable annuities, as are aspects of the deferred immediate annuity. One thing is for sure in the insurance industry; products and popularity are ever-changing.
