by John Darer® CLU ChFC MSSC RSP CLTC
Annuities soared to the top of the list as the most-asked-about financial product, with over 60% asking their financial advisors about them , according to a poll of 6,500 advisers conducted by research firm Cerulli Associates Inc., in conjunction with the Financial Planning Association, Morningstar Inc. and a handful of others groups which was presented in a report titled " Annuities and Insurance 2012: Evaluating Growth Capacity, Flows and Product Trends"
- Clients are asking about annuities without prompting
- Demand for annuities continues to surge
- Tax deferral is attractive to investors concerned about the prospect of rising taxes.
Telling statements attributed to a senior analyst at Cerulli, Donnie Ethier
“It speaks to the Catch-22 of the industry: Guarantees are more difficult to hedge and offer, but these are the only guarantees available,” he said.
"Investors are looking for guarantees," Ethier said. "The fact that [interest in annuities] has gone up in just a year from number six to number one speaks to that. People are looking for safety; they're looking for guaranteed income."
Source: Financial Planning
What Does the Annuity Survey Say or Imply About Structured Settlements
- While the survey is not specifically about structured settlements, it does include fixed annuities. Thus a number of the points can be extrapolated, with tax deferral particularly relevant to financial planning through the use of a non qualified structured settlement. via periodic payment reinsurance non qualified assignment [e.g. Structured Attorney Fees; Structured Celebrity Endorsement Fees Structured Employment Settlements ]
- The public is more actively seeking information about annuities because of the need for guarantees and a growing perception that annuities can provide them. The increasing awareness includes the universe of current and future prospects for structured settlements and centers of influence.
- There is a perception and concern about rising taxes that qualified structured settlements can ameliorate. For those that qualify by way of receiving payment for a workers compensation claim, or damages under a wrongful death claim or a personal injury claim involving physical injury or physical sickness, payments are income tax free. [see IRC 104(a)(1) and IRC 104(a)(2)]
There clearly is an opportunity for annuity issuers in the structured settlement space to ramp up their "cross over appeal" by adapting and/or distributing products already on the shelf in other business segments to the structured settlement distribution channel.