There are many more insights into the mind of an annuity buyer
December 27, 2022 by Sheryl J. Moore
Well, there is nothing so surprising about consumers buying annuities for guaranteed income.
However, LIMRA discovered that liquidity was a major driver for annuity purchase decisions as well. This was crazy to me, as the research I have read from the American Council of Life Insurers – ACLI indicates that most annuity purchasers do not use the liquidity features in their annuities. So, optics matter, but behavior doesn’t necessarily follow.
It is interesting to note that the returns offered on annuities are driving interest in the purchase of the products. Typically it is the guarantees on these products that drive the purchase decision. However, with CD rates being so low, I can imagine that the potential returns would be a greater concern during an interest rate environment, like we are in.
About 15% of those surveyed purchased an annuity, so that they could later “turn on” guaranteed income for life. While annuitization only occurs in about 2% of contracts, Wink, Inc. reports that an average of 18.4% of annuity purchasers are ACTIVELY taking income under their Guaranteed Lifetime Withdrawal Benefit (GLWB)/income rider.
Still, 10% of respondents cited preservation of principal as a determining factor in their annuity purchase. That is a little lower than I would expect, based on previous research.
If you are a data geek, like me, you can get all the deets here. There are many more insights into the mind of an annuity buyer: