Allianz Launches New Indexed Annuity

By Cyril Tuohy InsuranceNewsNet

By Cyril Tuohy

Allianz Life has announced the launch of the Allianz Core Income 7 Annuity with a Core Income Benefit rider as the company takes advantage of surging interest in indexed annuities.

The product is the first indexed annuity (IA) that appeals specifically to broker-dealers, but will also be sold through marketing organizations “associated with the Allianz Preferred platform,” the company also said.

Indexed annuities combine the security of a guaranteed interest rate with the potential to earn more, depending on the performance of a particular index.

Allianz Life chief distribution officer Tom Burns said Core Income 7 is designed to fill the income gaps faced by retirees. The product is available in 39 states, and the benefit rider is available at an additional cost.

“With the help of its guaranteed lifetime income withdrawals, customers can cover core living expenses for a more secure retirement,” Burns said in a statement.

Sales of indexed annuities in the second quarter hit $9.1 billion, an increase of 17.1 percent over the first quarter, according to Beacon Research. Sales of indexed annuities are up 3.1 percent from the second quarter in 2012, Beacon said.

Core Income 7 and its benefit rider guarantees principal and credited interest against market losses. The S&P 500 this year is up more than 23 percent, while the U.S. Aggregate bond index is down for the year, according to Barclays.

Two lifetime withdrawal options come with Core Income 7, the company said. Annuity contract holders can opt for level payments, or payments that increase each year beginning at age 50. The longer an annuitant waits for a payout, the higher the income percentage.

One of the drawbacks to annuities traditionally has been that they are difficult for contract holders to understand, but Burns called Core Income 7 a “simplified IA.” The other downside, at least now, is that interest rates are low. Pegging them to an index is a way of increasing their potential return.

Indexed annuities are considered an attractive option for retirees who, once they leave their employers, will need to supplement their incomes. This is because many have not set aside enough money during their working lives.

The crisis of 2008, which underscored the volatility of financial markets, reinforced the importance of a regular income stream.

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 [email protected].

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 [email protected].