A report says sales of various types of annuities will grow in 2011, showing older consumers may be maximizing the investment potential of their life insurance policies as they prepare for retirement.
The Life Insurance Management Research Association reported total annuity sales reached $60 billion during the first quarter of 2011, a 16 percent increase from the previous year. In addition, variable annuity sales rose 24 percent on an annual basis while fixed annuities grew 5 percent year-over-year. Consumers appeared to lean on annuities as a way to enhance their retirement plans.
"Strong VA sales, which recorded $39.8 billion in the first quarter, were the main driver of the overall annuity growth," said Joseph Montminy, LIMRA assistant vice president, annuity research. "They benefited from the positive equity market trend and consumers putting money back into the market."
Annuities are contracts with a life insurance company in which a policyholder pays a single premium that is in turn paid out over an extended time period. Experts say some consumers use annuities as a way to guarantee income over their retirement.