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The success of indexed annuities made them big news in 2004. Participants in Beacon Research's Fixed Annuity Premium Study saw their 2004 indexed annuity sales increase almost 52% from the second to third quarter alone. Relative to third quarter of 2003, sales rose an amazing 173%. With that kind of growth, it's no surprise that indexed annuities account for an increasing share of overall fixed annuity sales for these companies.
Some 27.6% of study participants' fixed sales came from indexed products in the first three quarters of 2004, up from 17.5% for the same period in 2003. Nor is this a recent phenomenon; the indexed annuity share of participants' sales has generally shown steady growth from quarter to quarter since 2002.
A combination of factors appears to have made indexed annuities the right product at the right time. "In general, indexed annuities are attracting investment dollars from people who want to be in the middle of the risk spectrum," said Pat Foley, president and CEO of Allianz Individual Insurance Group of Minneapolis.
Smack Dab in the Middle
By crediting a return based on the performance of an index, usually the S&P 500, indexed annuities provide more …