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Variable Annuity Purchases by Seniors Grow Despite
Controversy
Researches see shift taking place in where senior
citizens get annuities - brokers up, insurance companies down
Aug. 17, 2005 - Despite a series of state and
federal investigations in recent years into inappropriate variable
annuity sales to senior citizens, the percentage of annuities purchased
through brokers or other investment professionals jumped from 52 percent
in 2003 to 57 percent in 2004, according to the Market Audit.
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Market Audit is a comprehensive survey of household
financial behavior fielded by Integras, the advanced analytical services
division of market research leader Claritas Inc.
However, purchases made through insurance companies
declined from 30 percent to 25 percent over the same time period. No
significant change was detected in annuity sales through banks (15
percent of all variable annuity sales). Data for this analysis was
developed from over 175,000 interviews comparing variable annuity
purchase channels.
Variable Annuity Purchase Channels:
Annuities are insurance products that provide
investors with regular income payments. Unlike fixed annuities, which
pay a guaranteed amount at regular intervals, the payments from a
variable annuity depend on the value of the account, which can rise or
fall. Typically, the money in a variable annuity is invested in a mutual
fund that holds stocks or bonds.
The analysis also showed that age, wealth and small
business ownership appear to be drivers of annuity channel purchase
preference. For example:
> The mean age of those purchasing
through an insurance company was 59 years old compared to those
purchasing through a bank with a mean age of 65 years old (mean age
through the broker channel was 60.5 years old).
> Annuity holders with the highest
levels of Income Producing Assets (IPA) were the most likely to purchase
through a broker and those with the lower average IPA levels were more
likely to purchase through a bank. (IPA measures a household's liquid
financial assets and includes products like checking accounts, savings
accounts, certificates of deposit, IRAs, mutual funds, retirement
accounts, stocks, bonds, securities and other liquid assets. IPA does
not include the estimated value of a household's primary residence or
vehicles.)
> Those who purchase through an insurance company are also
the most likely to own a small business -- 16.5 percent are business
owners compared to 14.7 percent through the broker channel or 10.3
percent through the bank channel.
 About
Integras
Formed in January 2003, Integras provides high-end
analytical consulting and advanced decision support for marketing and
location strategy. A division of Claritas Inc., Integras combines
sophisticated quantitative analysis with the broadest array of consumer
and business data available in the United States to help companies make
better strategic decisions. For more information about these and other
Integras services visit
www.integrasconsulting.com.
About Claritas
Since 1971, San Diego-based Claritas claims to be
the pre-eminent source of accurate, up-to-date marketing information
about people, households and businesses within any geographic area in
the United States. Claritas is a division of VNU, a world-leading
information and media company that includes ACNielsen, Nielsen Media
Research, Spectra Marketing Systems and Scarborough Research, among
others. To learn more about Claritas and VNU products and services visit
their web sites at
www.claritas.com and
www.VNU.com.
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