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New York Targets Annuity Replacement Practices The New York Department of Financial Services (DFS) wants annuity carriers and advisors to perform an adequate suitability review when recommending an annuity sale or replacement. The DFS has issued guidance to remind life insurers, producers and distributors of their obligations under New York insurance law. Suitability review requires sellers to determine the appropriateness of the sale or replacement of any annuity contract when recommending such a transaction to a consumer. DFS officials said they have discovered that some insurers, producers and distributors have been recommending that consumers replace existing deferred annuities with immediate annuities. The consumers were encouraged to do so without consideration of lost benefits and without being shown a comparison between the income benefit available under the consumer’s existing annuity and the amount available under the proposed annuity. This violates New York insurance regulations.
ATHENE TO DEEPEN BANK, B/D RELATIONSHIPS
Athene USA is a major player in the world of fixed annuities, and its parent company is fresh off an initial public offering. But that’s not enough for Athene. The carrier wants to broaden its horizons and expand retail annuity distribution through banks and broker/dealers, CEO Grant Kvalheim said. The company is a subsidiary of Athene Holding, which raised $1.1 billion in an initial public offering in December. Athene USA was Grant Kvalheim the No. 2 seller Athene CEO of indexed annuities in the U.S. in the third quarter, with $1.6 billion in sales. The company sells FIAs through independent marketing organizations (IMOs), and has relationships with as many as 30,000 independent agents through those IMOs. IMO distribution relationships will continue, but the company is looking DID YOU
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to grow through other channels as well, Kvalheim said. “We want to grow in banks and broker-dealers because they are doing more and more of this business,” he added.
HOLISTIC IS THE WORD FOR ADVISORS
A holistic planning approach that focuses on developing retirement income for clients — that’s what the Insured Retirement Institute (IRI) predicts more advisors will adopt as they focus on developing retirement income for clients. The IRI released a report that finds strong demand for lifetime income based on demographics, increasing longevity and the demise of traditional pensions. The report concludes that holistic retirement planning with a focus on income-generating strategies will help advisors address this demand while adding value to the client-advisor relationship. The IRI also discussed the impact of rising interest rates. Although rates are still historically low, if they can continue to increase at a gradual pace, the report suggests the market may respond by offering higher crediting rates on fixed
The fixed annuity market sold a record-breaking $85.5 billion in the first three quarters of 2016. Source: Beacon Research
InsuranceNewsNet Magazine » February 2017
The There recent are 11rise companies in interest offering rates may be a positive QLAC (qualifying longevity annuity development for the industry contract) products. While this isas we move into 2017. a small and new part of the DIA market, we expect to see an uptick — Insured Retirement in sales in 2016. Institute president and CEO Cathy Weatherford
annuities and more generous payouts on both fixed and variable products offering lifetime income. Should rates normalize, it will take some time to have an effect, so rising rates should be viewed as having a late-2017 impact on product design and/or sales.
NEWS FROM THE INDUSTRY
Here’s a flurry of product-related news: • Security Benefit launched Select Benefit Annuity, a fixed indexed annuity that offers contract holders the ability to accelerate the amount of income taken in the first 10 years. This single-premium FIA features a new, optional accelerated income rider that offers clients the ability to secure higher annual income for the first 10 years after starting income without jeopardizing their long-term financial security. • The Standard introduced Strategic Choice Annuity 7, a new singlepremium deferred index annuity with returns based upon the performance of the J.P. Morgan U.S. Sector Rotator 5 Index. Strategic Choice Annuity 7 combines the strength of an annuity contract with the ability to receive interest based on increases in an index with adjusting investment allocations. Strategic Choice Annuity 7 uses a pointto-point account with a seven-year index term. Unlike the typical indexed annuity, which credits interest annually but limits those credits by a cap, the Strategic Choice Annuity 7 has no cap and credits interest at the end of seven years.