Variable annuity players join the fixed indexed annuity fray

John Hancock launches new product; Pac Life, Mass Mutual and Hartford file with regulators

Sep 29, 2011 @ 11:17 am

By Darla Mercado

Carriers that have been stalwarts in the variable annuity industry are trying their hand at manufacturing and selling fixed indexed annuities.

John Hancock Annuities earlier this month launched its Inflation Guard annuity, which credits a fixed interest rate during the first year, and a rate pegged to the consumer price index-urban for subsequent years. Customers can choose how long they'll stay in the annuity, up to 10 years, according to a prospectus filed with the Securities and Exchange Commission. But for now, only the 10 year structure is available to clients, said Tom Mullen, chief marketing officer at John Hancock Annuities. Surrender fees at their highest are 8% and decline from there.

The insurer has labeled its product a registered market value adjusted annuity.

John Hancock joins Massachusetts Mutual Life Insurance Co., which filed its New Elevations indexed annuity with state insurance regulators in May. A John Hancock spokesman declined to comment. MassMutual is currently deciding on the timing for launching its indexed annuity, said spokeswoman Patricia Norris Lubold.

Pacific Life Insurance Co. and The Hartford Financial Services Inc. filed indexed annuities with insurance regulators in June. Pacific Life spokesman Tennyson Oyler declined to comment on the filing.

The Hartford withdrew its application in August, according to the Connecticut Insurance Department, but the carrier can re-file and observers expect it to launch an indexed annuity this fall.

The carrier's spokesman, David Potter, declined to comment on the filing.

Given the carriers' history in the variable annuity business, industry experts expect the companies to target the same audience of registered reps at broker-dealers. Currently, ING USA Annuity and Life Insurance Co., Jackson National Life Insurance Co. and Lincoln National Corp. are the most popular issuers of indexed annuities among registered reps.

But tapping that audience isn't going to be easy, as the insurance companies will have to change their tune to get the reps' attention — especially in an environment that's traditionally been more open toward variable annuities rather than indexed annuities.

“[Variable annuity wholesalers] have been selling against the indexed annuity for so long, it's hard to ratchet back and say that they're not the enemy,” said Jack Marrion, president of Advantage Compendium Ltd., an indexed annuity research firm.

Successfully marketing the product likely will require wholesalers and carriers to rethink their marketing approach.

“It requires a different view of how to present the product,” said Mr. Marrion. “Reps are used to presenting ‘return.' This is ‘safety.'”

0
Comments

What do you think?

View comments

Recommended for you

Featured video

INTV

Behind the scenes of InvestmentNews' Best Places to Work

Benefits and vacation policies are important for hiring top talent, but giving employees a sense of ownership in decision-making is among the most important qualities, editor Fred Gabriel says.

Latest news & opinion

Why we must create a more diverse and sustainable financial planning profession

CEO explains how, why a firm should commit to conscious inclusion.

Pope Francis wants financial advisers to work like fiduciaries

Vatican bulletin admonishes advisers who act against the best interests of their clients.

Wells Fargo sees slowdown in advisers exiting this year

The 2016 banking scandal and public relations fiasco had alienated some of the firm's advisers.

States trying to save DOL fiduciary rule appeal rejection of effort to intervene

California, New York, Oregon ask for rehearing by full 5th Circuit Court of Appeals.

Employees at best places to work focus on the person — and the fun

Employees at best places to work firms focus on the person and fun.

X

Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting investmentnews.com? It'll help us continue to serve you.

Yes, show me how to whitelist investmentnews.com

Ad blocker detected. Please whitelist us or give premium a try.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print