NEW YORK -- When LIMRA Secure Retirement Institute researchers quizzed survey respondents on how big the lump sum would have to be to forgo a monthly guaranteed income option – they were surprised by the results.
Respondents were told hypothetically how the lifetime income option – an annuity – works before answering.
“It turns out almost half the people said they would not switch no matter how much was offered to them,” said Matthew Drinkwater, director of LIMRA SRI. “We were really struck by that.”
He discussed it at a LIMRA Annual Conference session on annuities.
The significance is obvious for an industry that struggles to market annuities to a mostly skeptical audience. While annuities are recommended far and wide by thoughtful experts and planners, they barely seem to move the needle.
Yet, LIMRA research consistently finds that nuanced explanations seem to trigger a receptive response. The current research is even more defined as LIMRA focused on respondents between ages 50 and 70 with at least $100,000 of investable household assets.
That is the group most in need of guaranteed income to counter longevity concerns. And the match is seemingly a good one based on feedback from existing annuity owners.
“When you go to a group of consumers and talk to them about the concept (of annuities) we find that depending on how you frame the question, about a third to about just under half say that they are interested, but the framing is very important,” Drinkwater said.
The session featured Drinkwater moderating a discussion among company executives on how to translate the research into action.
A big selling point is the freedom that a responsible plan that includes an annuity component offers consumers, Drinkwater explained. Absent a guaranteed income provision, surveys show that retirees tend to hoard what money they have out of fear.
“On some psychological level, it’s really hard to pull that money out of savings over and over again,” Drinkwater said. “Nobody is suggesting we take all of your money and dump it all into an annuity. It’s really about taking a portion of that money and enhancing your life.”
InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at [email protected]. Follow him on Twitter @INNjohnh.
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