Filed Under:Life Insurance, Life Planning Strategies

Kehrer-LIMRA: Bank Annuity Sales Up 11% Over Year-Ago Period

Photo Credit: jscreationzs
Photo Credit: jscreationzs

Annuity sales through financial institutions increased nearly 11% in the third quarter of 2011 compared to the comparable period one year ago, according to a new report.

Kehrer-LIMRA, a subsidiary of LIMRA Services, Windsor, Conn., published this finding in a summary of results from its monthly bank annuity sales survey. The results are based on a national sample of banks that have a minimum of $4 billion in assets.

The participating institutions account for about one-third of all bank annuity sales.

The survey reports that bank annuity sales increased to $9.2 billion in third quarter from $8.3 billion in the third of 2010, a 10.8% rise.

The third quarter figure is, however, down from the $10.1 billion recorded in the second quarter of 2011.

Variable annuity sales through financial institutions in the third quarter totaled $5.2 billion, up 24% from the $4.2 billion posted in the third quarter of 2010.

Fixed annuity sales through banks topped out at $4.0 billion in the year quarter, a 5% decline from the year-ago period.

The Kehrer-LIMRA report also shows the average effective yield on bank fixed annuities at 1.24% as of September 15, below the average 5-year CD rates of 1.34%. This compares with an average effective yield and average 5-year CD rate of 1.61% and 1.71% respectively, for the same period one year ago.

Separately, a new report from research firm Hearts & Wallets LLC, Hingham, Mass., finds that investors who use an insurer as their primary firm invest nearly 20% of assets in annuities.

The quantitative survey of more than 4,500 U.S. savers is a representative sampling of the U.S. population.

The report also found that investors who use a bank as their primary provider invest nearly half of their assets in bank products, such as certificates of deposit, FDIC savings or checking accounts.

Among the report’s other findings:

● 46% of investors who have $500,000 or more in investable assets hold annuities.  

● Nearly half of investors ages 21-27 say they don't own investment products.

● 33% of fully employed seniors own annuities, a percentage higher than that of all other age groups..  

● Average annuity allocation grew to 12% in 2011 from 9% percent in 2008 among high-net worth pre/post retirees.

● About one-third (29%) of pre/post-retirees own annuities.  Those who own them invest about one-fifth (21%) of their assets in annuities.

● More than a quarter of pre/post-retirees who do not currently own an annuity or individual bond are interested in these potential income-producing products.  The most important time for product trials is among younger investors, such as Accumulators, ages 20s through 50s.  

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Nichole Morford

Nichole Morford
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