Lincoln Financial Offers 2013 Trends Impacting Life/ Annuity Markets
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flexibility, an evolving combination/
market, risk managed strategies, and tax deferrals are some of the
trends that
Insurance and Retirement Solutions business, sees driving the
individual life and annuities industries in 2013.
"With the realities of today's economic climate and our society's
evolving demographics, we see continued interest in financial
solutions that offer a level of predictability - whether that's in the
form of a death benefit, a living benefit, asset protection, or the
elimination of the 'use it or lose it' risk of some products," said
Konen. "As the industry works to deliver on these consumer demands, we
believe 2013 is primed to see the development of many unique
solutions, while also seeing some once-popular products and features
reemerge in cases of 'what's old is new again.'"
Among the 2013 trends that we may see:
Today, three in ten American households are uninsured and half say
they are underinsured1. Competing financial obligations, perceptions
about life insurance costs, and lack of understanding about needs
often prevent consumers from purchasing a policy. The low interest
rate climate has further complicated the problem by making many forms
of insurance more expensive / unattainable for the average American.
To help bridge this gap between the public's need for life insurance
and their ability to secure it, expect to see innovative life
insurance alternatives emerge that go beyond the traditional offerings
consumers have known. These innovations will balance financial
planning needs, flexible coverage and cost efficiencies against the
dynamics of today's economic climate.
Once the industry's life insurance product of choice in the 1990s,
Variable Universal Life (VUL) is primed for a comeback. By balancing
death benefits with market-driven cash value potential, VUL products
can help consumers financially protect their loved ones, while also
providing a potential source of supplemental income to keep pace with
life's changes. This combination of features in a single solution can
be very compelling during these uncertain times.
Life Combination Products: Flex Pay Premiums, Younger Clients, ABRs
With an estimated 70 percent of people turning age 65 expected to have
a long-term care need2, life combination products continue to rise in
popularity as alternatives to traditional standalone LTC solutions
that carry a "use it or lose it" risk. As this trend continues, expect
to see increasing interest in linked-benefit products with LTC riders
offering premiums that can be paid over several years. Linked-benefit
products with LTC riders have historically appealed to older clients
with substantial savings and the ability to pay a lump sum. However,
the option to spread premiums over time offers younger clients in
their pre-retirement years and still accumulating assets, the
opportunity to plan for and protect against the financial impact of a
As the combination space evolves, also expect to see increasing demand
for life insurance solutions with Accelerated Benefit Riders (ABR).
While linked-benefit products with LTC riders are designed for those
clients primarily concerned with long term care, ABRs serve a growing
market demand for clients who have a primary need for death benefit
protection, but are also concerned about the impact that a permanent
chronic or terminal illness may have on their financial well-being.
Annuities: Guaranteed Living Benefits, Risk Management Strategies, Tax
Deferrals
Americans today face the strong possibility of outliving their
retirement assets. This will continue to drive the popularity of
Guaranteed Living Benefit (GLB) riders with annuities, as they provide
clients a minimum guaranteed lifetime income stream that doesn't
require them to give up control of their assets. With this trend,
expect to see providers place added emphasis on risk management
strategies built into the products and their benefits. These
strategies are designed to reduce equity risk during volatile markets
and lead to a more consistent pattern of returns. The goal is to
protect clients' account values and encourage them to remain invested,
which over time may increase the probability of growth for retirement
income. These risk management strategies also enable companies to
continue providing compelling GLBs.
With the recent changes to the tax landscape, particularly among the
affluent population, also expect to see a renewed emphasis on the tax
deferral aspect of annuities. Because annuity assets accumulate
tax-deferred, there are no tax consequences until clients take money
from their contract, often at lower tax rates occurring during
retirement, making this annuity value proposition more attractive to
clients in 2013.
Disclosure Variable products are sold by prospectus, which contains
the investment objectives, risks, and charges and expenses of the
variable product and its underlying investment options. Investors need
to read the prospectus carefully before investing.
About
Corporation (NYSE: LNC) and its affiliates. With headquarters in the
assets under management of
Through its affiliated companies,
annuities; life, group life, disability and dental insurance; 401(k)
and 403(b) plans; savings plans; and comprehensive financial planning
and advisory services. For more information, including a copy of our
most recent
http://www.LincolnFinancial.com.
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Source: | Associated Press |
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