Filed Under:Markets, Gen X Y

Deferred annuities: Pension building blocks for the next generation


The most recent shift in the audience for deferred annuity products may come as a surprise to many advisors who are accustomed to selling these vehicles to older clients in pursuit of secure income late in life. Insurance carriers have taken steps to break free of this typical market, in many cases by changing product cost structures to appeal to an expanded (and much younger) client base. As a result, advisors need to recognize that this new generation of deferred annuity product can be marketed even to clients who are in their 30s, 40s and 50s, erasing the common perception that most annuity purchasers are those stereotypically risk-adverse clients who have already retired. Younger generations have joined the market for secure income, which should have every advisor asking, how young is my next annuity prospect?

Deferred annuities: A primer

Although many younger annuity purchasers have committed to further fund their deferred annuities in future years, a low initial premium allows clients to purchase deferred annuities that can be immediately contributed to individual retirement accounts without exceeding the annual maximum contribution limits established for these accounts.

This strategy allows the younger client to create a retirement plan on a tax-preferred basis that mimics the traditional pension plans offered by employers in previous generations. Further, the strategy can prove effective for younger clients whose employers may not offer a retirement savings plan.

Originally published on National Underwriter Advanced Markets. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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Nichole Morford

Nichole Morford
Managing Editor

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