Variable annuity owner wonders whether annuity benefits will be there

Peter Gould and his wife are counting on the guaranteed lifetime withdrawal benefits from their variable annuity to provide "predictable and secure retirement income."

Like many consumers who own these products, the Bloomington, Ind., couple had little idea that some insurance companies are taking increased investment risks with policyholder funds. Some insurers are already in receivership.

Most recently, PHL Variable Insurance Co. and its subsidiaries, Concord Re and Palisado Re, were placed into rehabilitation May 20 by order of the Superior Court of the State of Connecticut, Judicial District of Hartford.

Gould has been following along as concerns rise about private equity involvement in insurance companies. He submitted a comment letter to the Life Actuarial Task Force on its proposal to tighten the reserving standards for participatns in reinsurance deals.

LATF is part of the National Association of Insurance Commissioners. Gould joined a LATF call Thursday, a rare case of a consumer giving regulators direct feedback.

"I'm really totally dependent on you guys, the regulators, to make sure that the behavior is appropriate and that the guardrails or monitoring or whatever, is sufficiently robust that I'm going to be able to collect my lifetime benefit," he said.

Ran retirement benefits business

The Goulds are not without knowledge about the retirement planning business. They ran a retirement plan benefits business for 35 years and personally invested in a 401(k) plan that offered annuities at a time when in-plan annuities were a rarity.

In his three-page comment letter, Gould took note of the at-times close relationship between regulators and the industry they oversee.

"It seems to me that there's a notable level of deference to what might be convenient or expedient for the companies that have chosen to employ the reinsurance strategies as described in the materials," Gould wrote. "While I understand professional cordiality, mutual respect and common stakeholder concerns, the level of deference to the 'regulated' gives the impression of a relationship that's too 'comfortable.'"

While insurers often note that policyholders are protected by state guaranty associations, it isn't always a great backstop. In some cases, as with the former Colorado Bankers Life Insurance Co., policyholders end up waiting years for full access to their money.

"Don't get me wrong, I'm a believer in insurance products," Gould wrote. "I just don't want to be a ward of my state guaranty fund."

InsuranceNewsNet Senior Editor John Hilton covered business and other beats in more than 20 years of daily journalism. John may be reached at john.hilton@innfeedback.com. Follow him on Twitter @INNJohnH.

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InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at john.hilton@innfeedback.com. Follow him on Twitter @INNJohnH.