By Cyril Tuohy
Lincoln Financial Group has launched its first deferred income annuity (DIA) as the life and annuities giant seeks to take advantage of the growth prospects surrounding the product.
Total sales of DIAs are expected to double this year over last year, although from a relatively small base.
Brian Knoll, senior vice president of annuity solutions at Lincoln Financial Group, said that shifts in the retirement market, increasing longevity and recent economic events had made the launch of Lincoln’s Deferred Income Solutions viable.
DIAs offer investors the opportunity to defer the income generated from the annuity anywhere from 13 months to 40 years, and experts say DIAs should be used as part of a guaranteed-income strategy that relies on other income products as well.
Knoll also said that Lincoln’s DIAs are best suited to younger baby boomers who still have plenty of time to adjust their income plans.
“Lincoln’s annuity portfolio has always been one focused on income, and this product builds on this expertise and further diversifies our offerings as we support advisors in addressing a variety of retirement planning needs,” Knoll said, in a news release.
Buyers of Lincoln’s DIA will be able to choose when they begin receiving fixed income payments following the deferral period, and the product also offers death benefit protection during the deferral and income phases of the contract, Lincoln said.
Though total sales of DIAs are still low compared to other guaranteed-income products, on a percentage basis DIAs will be the fastest growing annuity product in 2013 and 2014, according to projections by the Insured Retirement Institute.
DIA sales, which last year surpassed the $1 billion mark, are on pace to hit $2 billion this year, according to LIMRA.
Lincoln Financial has now joined other big sellers of annuities such as Northwestern Mutual Life, Mutual of Omaha, Fidelity Investments, New York Life and Principal Financial Group.
Cyril Tuohy is a writer based in Pennsylvania. He has covered the financial services industry for more than 15 years. He can be reached at Cyril.Tuohy@innfeedback.com.
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