Workers expect their defined contribution plans to play a greater role in their retirement income than annuities.
By Cyril Tuohy
Allianz Life has announced that it has extended its agreement with the global investment company Barclays to use a Barclays-branded index that reflects the performance of an allocation strategy across stock and bond asset classes.
Use of the Barclays US Dynamic Balance Index until 2020 will give advisors some measure of comfort when selling Allianz retirement products.
From the buyer perspective, investors are likely to recognize the global brand when weighing whether to invest in an Allianz annuity or life insurance product compared to products offered by competitors.
Barclays’ US Dynamic Balance Index will be offered on Allianz Life fixed index annuity (FIA) and fixed index universal life (FIUL) products, the company also said.
Tom Burns, chief distribution officer with Allianz Life, said inclusion of the US Dynamic Balance Index “gives our products a powerful combination for consumers looking for protection with accumulation potential based on the performance of an external index.”
“We believe the remarkable success of this index reflects Americans’ appetite for growth potential with a level of protection against the effects of volatile markets like the 2008 recession,” Burns said in a news release.
Allianz Life began using the US Dynamic Balance Index in August.
Late last year, Allianz began adding the Barclays index to allocation choices on its Allianz 222 Annuity, Allianz 360 Annuity, Allianz 365i Annuity, Core Income 7 Annuity, Signature 7 Annuity and Allianz Life Pro+ Fixed Index Universal Life Insurance Policy.
Barclays’ US Dynamic Balance Index shifts weights every day between the Standard & Poor's 500 index and the Barclays U.S. Aggregate Bond Index based on volatility in the marketplace.
When volatility in the Standard & Poor's 500 index — an equity index — is low, the weighting of the US Dynamic Balance Index shifts toward the Standard & Poor's 500 index.
When volatility in the equity index is high, the US Dynamic Balance Index shifts its weighting in favor of the bond index, a fixed-income index.
Constant rebalancing of the indexes manages market volatility and allows clients to benefit more when the market is rising. The Standard & Poor's 500 index rose 30 percent last year.
Barclays offers other index allocation options on its life insurance products. Options include the Nasdaq-100 Index, the Russell 2000 Index, the Dow Jones Industrial Average, Barclays Capital U.S. Aggregate Bond Index and the EURO STOXX 50 Index.
Cyril Tuohy is a writer based in Pennsylvania. He has covered the financial services industry for more than 15 years. Cyril may be reached at email@example.com.
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