The LIMRA Secure Retirement Institute recently published a review entitled Improving Retirement One Step at a Time, which looked at annuity knowledge, attitudes and ownership. They found that no matter what level of wealth they have, people who own annuities have a much better confidence level about their retirement than those who don’t own annuity products. They think that they will be able to live the lifestyle in retirement that they’ve planned for their whole lives. This information was summarized in the LifeHealthPro article “Annuity ownership increases retirement confidence,” by Peggy Bresnick. The review also found that people who are familiar with annuities typically have a more positive attitude about the products, hence they are more likely to own an annuity.
It’s often a concern in the media that even those who own annuities don’t know exactly what the products entail. While there are some annuity owners who don’t know all of the benefits and restrictions their products have, LIMRA found that most annuity owners fully understand their product’s benefits and features.
The more that people know about annuities, the more positive their attitude about the products tends to be. There is a strong connection between annuity education and literacy and consumers’ attitude about and purchase of annuities. This offers important information for insurance companies who can work to improve the overall consumer understanding about these products. LIMRA’s review recommends that insurers and advisors work harder to promote the benefits and features offered by annuities. They must be honest and demonstrate exactly how annuity products might help consumers meet their financial goals. It’s important for consumers to know annuity details because an annuity purchase is often the biggest one-time purchase that a person will make. Also, some annuities have surrender charges that don’t allow you to withdraw the money for a certain time period without paying a large fee. Consumers should be informed that annuities are meant to be long-term investments so that they use them the right way in their financial planning.
Annuities can be useful retirement planning tools for consumers. There is a lot of annuity misinformation spread in the media, so it’s important for insurance companies and reputable advisors to educate the public about how annuity products can be used and which benefits they offer. The misinformation is just as bad for the industry as an overall lack of knowledge about how annuities can be used in retirement income planning. Advisors and brokers can start by educating the press and public about annuity benefits, so that they can spread truths through the media. That, along with useful tools and illustrations, will help educate individuals about annuities. The more the general public understands about annuities, the higher their opinion of the products and use of them in retirement plans is. It’s certainly worth considering a product like an annuity that increases the retirement confidence of those who own it.
Written by Rachel Summit