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LIMRA: Annuity purchases slip in 2012, but still strongPosted On Wed, February 27, 2013
Despite annuity rates being quite affordable, the pace with which they were purchased declined in 2012, a new report reveals.
According to new data released by consulting and professional development firm LIMRA, annuity sales last year slipped approximately 8 percent when contrasted with the pace of purchases in 2011. Overall nearly $220 billion worth of annuities were paid for, roughly one-quarter of which were bought in the fourth quarter.
Despite the modest decline, deferred income annuities faired well, as noted by Joe Montminy, assistant vice president and director of annuity research at LIMRA.
"As an emerging market, DIAs experienced significant growth in 2012," said Montminy.
He added that more people are seeing the value of annuities, especially among individuals who are looking to retire and are in need of extra income.
As for the consumers who were the most likely to purchase annuities, they tended to range between 45 and 59 years old. In an interview with InsuranceNewsNet, Montminy noted that about 66 percent of all annuities are bought by people who are in their 50s and 60s.
Montminy also made mention of other annuity products that buyers were eager to get a hold of last year. Variable annuities were among the most popular, mainly because they offer a steady revenue stream that is guaranteed for their lifetime.
More people are turning to annuities and other investments to help finance their retirement. Social Security serves as an effective supplement but financial experts say that its far from being efficient. Young Americans who are several years away from retirement worry that Social Security may not be around once the leave the workforce, which serves as another reason why annuities are a smart investment.
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