A distribution deal between Lincoln Financial and a Georgia-based independent marketing organization (IMO) to exclusively market a new index annuity is the latest sign of the insurer’s push into the channel.
Lincoln Impact Advantage is designed to be sold to high-net-worth individuals and will be offered exclusively by 500 agents and advisors affiliated with The Impact Partnership, based in Kennesaw, Ga.
“We are focused on expanding distribution among IMOs, and have seen tremendous success following the launch of Lincoln’s first proprietary fixed index annuity with Impact Partners,” said Tad Fifer, head of fixed annuity sales and RIA sales and strategy at Lincoln Financial Distributors.
Lincoln Impact Advantage is designed for accounts with initial investments of $100,000 or more. Accounts with initial investments of $500,000 or more benefit from preferential interest crediting strategies, Fifer said.
The commission-based annuity comes with seven- and 10-year surrender charge periods, and credits account values using the Balanced Capital Strength 6 Index developed by First Trust and JP Morgan.
The indexing strategy credits interest to the policy based on a two-year period using a point-to-point calculation method.
An income rider is available for an additional annual charge.
Uniqueness A Selling Point For Advisors
Exclusive deals between index annuity manufacturers and IMO distributors aren’t new, even if The Impact Partnership deal represents new ground for Lincoln, which sold nearly $800 million worth of index annuities in the second quarter.
As of the fourth quarter last year, 31.7 percent of all index annuity sales were proprietary, or available to a limited number of distributors, according to Sheryl J. Moore, president and CEO of Moore Market Intelligence and Wink Inc., publisher of Wink’s Sales & Market Report.
“The reason such a large percentage of sales are proprietary is because marketing organizations want something unique to recruit to, in terms of product,” she said.
Lincoln has used IMOs to distribute many of the company’s other products, such as life insurance and long-term care. But broadening annuity distribution has been a long-time goal for Lincoln CEO Dennis Glass.
It is the first time Lincoln has developed an index annuity to be sold exclusively by an IMO.
Under the Department of Labor’s now-defunct fiduciary rule, only the largest IMOs with billions of dollars in annual annuity premium would have been allowed to sell annuities into retirement accounts, on a par with banks, brokers-dealers and RIAs.
With the rule gone, smaller IMOs are free to enter into agreements with insurance companies, as they have been in the past.
Second-quarter index annuity sales rose 18 percent to $17.3 billion, compared with the year-ago period and rose nearly 22 percent compared with the first quarter, Wink reported.
Sales of index annuities least year fell 7 percent to $54 billion over 2016.
But this year could be a record year thanks to rising interest rates, insurance companies implementing fire sales to incentivize agents and the demise of the DOL rule.
InsuranceNewsNet Senior Writer Cyril Tuohy has covered the financial services industry for more than 15 years. Cyril may be reached at [email protected]
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