According to the Institute of Pension Provision, for the first nine months of 2019, annuity sales have reached $174.3 billion, which is 7.5% more than last year.
However, more and more Americans are dissatisfied with the fees of insurers and financial agents. In May, the arbitral tribunal awarded $3.2 million to a family from New York that claimed that they had fallen victims to changing annuity and life insurance policy sales schemes. According to FINRA, as of November, 2019, nearly 200 annuity contracts were in arbitration.
“Retirement annuities are incredibly complex. They have features and riders that turn off and confuse consumers,” said Rick Edelman, the founder of Edelman Financial Engines.
On the other hand, the government supports and popularizes this product. This is partly due to the great number of population that was born during demographic explosion. Another reason is longevity. The longer you live, the more money you need. And the third reason is math. Michael Finke, a professor at the American College said: “For an economist, annuity is the most effective way for income generation upon retirement.”
Jean Statler, the executive director of Alliance for Lifetime Income, said that over time, the commissions should decline. The organization works both with consumers and insurance companies for this purpose. “We are making efforts to streamline the sales language so that people can better understand what they are buying. For example, we give people a list of questions that they should ask before buying an annuity,” says Jean Statler.
Megan Gorman, the Managing Partner at Checkers Financial Management in San Francisco, believes annuities can be a smart investment. “It may be an expensive tool, but it alone guarantees a cash flow until the end of life,” Gorman concluded.
Photos are from open sources.
