Lower rates have not managed to contain the sales growth of annuities in the United States. According to a study published by Beacon Research, sales of annuities to Americans posted significant gains in the second quarter of 2011. The previous quarter had also indicated an increase in sales, thus making the gains consecutive.
Annuity sales were up 8% when compared to the first quarter. Sales of contracts exceeded $20 billion. The largest growth observed was in income annuities, up 30 percent. Indexed annuities accounted for 18 percent of growth, followed by fixed-rate market value adjusted (MVA) annuities by 4 percent. Sales of fixed-rate non MVAs actually decreased 5 percent.
The uncertain economic climate in several developed nations can be determined to have played a part in pushing annuity sales. Many experts believe that reduced consumer confidence has led to the enthusiasm currently seen for annuities. Guaranteed lifetime income benefits are certainly more attractive than investing in roller coaster stocks.
The Beacon Research report downplays the a belief widely held by many economists that lower interest rates can have a negative impact on annuity sales. The long period of low rates that has been experienced since early 2011 has substantially reduced investor payouts, yet it doesn’t appear to have affected the sales of annuity contracts.
Indexed annuity product seem to be gaining greater market share than variable or fixed annuities. Efficient marketing and guaranteed lifetime withdrawal benefit options are thought to be the driving factors behind the sales growth. The simplicity of the annuity contracts and the overall favorable view by the federal government are also contributing factors.
