The Phoenix Cos. on Tuesday announced a new single-premium, fixed indexed annuity which can be used as guaranteed income for retirees.
Annuities allow a customer to deposit a sum of money in exchange for regular payments, which vary in frequency and amount depending on the terms and the premium. Insurers and retirement companies have offered riders to guarantee the payments regardless of how long a person lives, for a fee.
The premiums can be up to $1 million, but the average has been about $90,000 to $95,000, said Mark Fitzgerald, national sales manager for Saybrus Partners, a Phoenix distribution subsidiary.
It’s appealing mostly to people between 60 and 70 years old at a time when Baby Boomers are preparing for retirement and are concerned about whether they’ll have enough money to last the rest of their lives.
“I think you’re seeing now a lot of individuals that are trying to take a defined contribution asset and put some guarantees around it,” Fitzgerald said. “As you know, many folks don’t have the fortune of having defined-benefit plans any longer … So, a lot of folks are trying to put some predictable guarantees in place for themselves for income either at the point of retirement or for some point down the road.”
As in all indexed annuities, the customer benefits from growth in the market, but the account doesn’t lose value when the index declines as it would with a direct investment. Financial services companies that sell annuities benefit from the fees charged to customers.