What do most people think of when the month of June is mentioned? Summer, or graduation, perhaps? The Society for Annuity Facts & Education (SAFE) has joined forces with an industry coalition to declare June as Annuity Awareness Month.
Annuities are a payment method established between a annuity holder and an insurance company. The owner, at first, makes cash payments into this annuity. After a certain number of years, the annuity reaches a payout period where the owner receives monthly payments (plus any interest earned) of the money they previously put into the account.
The coalition is made up of life and annuity carriers, annuity marketers, distributors, and data aggregators. What many annuity companies don’t understand is why annuities have garnered such negative attention as of late. Although many owners demonstrate a unique loyalty and commitment to their annuity purchases (93% report still owning their first one), a vast majority of people are opposed to purchasing one.
People typically buy annuities to help manage their income during retirement. Most of us want plenty of money during retirement, yet so few are buying annuities. Unfortunately right now people in retirement are living on meager wages and rapidly declining savings accounts.
Annuity awareness month is “timely and very much needed,” Sheryl J. Moore, president of SAFE and an expert on the annuities market, said. “When I started my business 10 years ago, we focused on life and annuities, and Americans are familiar with life and the need for it, but not with annuities.”
Consumers are more familiar with life insurance and what it entails than annuities. Annuities function in the opposite way life insurance does: it protects the contract holder from living too long by giving them a monthly stipend of their own money.
Annuities are a good investment to make because most people will spend a great deal of their lives in retirement. Unfortunately, there may be skeptics out there because there are some who do not qualify. For example, eight out of ten non-qualified annuity owners have an annual household income below $100,00, while most non-qualified individuals are female.
These should not be hindrances to looking into buying an annuity however. Everyone will eventually want to retire, and when they do, it’s best to have some money to dig into. Moore explains that terminology such as “surrender charges” and “index crediting” should not be daunting to a consumer — annuities are really not as complicated as they seem.
Annuities are the only financial product designed to promise lifetime income, and consumers need to understand how they work in order to life a happy retirement.
Annuity Awareness Month will hopefully pique the American interest in these benefits of annuities and instill trust back in to insurance sector of the market.
“Annuities give people an opportunity to earn a meaningful return beyond whats available to them via most CD’s or government bonds. For people who have a motive in investing in their retirement future, it can difficult to reach financial goals when earning less than 3% interest on investments, which is common for many CDs and Govt bonds. With annuities, your money is invested and managed by the highly rated and regulated insurance companies. Annuities are purchased through a licensed ins agent, you should try to buy though someone who is not only licensed, but is experienced with the all of the available product offerings.” says Todd Albert, CTO of Sell My Annuity.