July/August 2010
A Fond Farewell And Thank You To Jim Teague
Greetings from Oregon and happy summer! This combined July/August edition is full of great information as well as a parting article by Jim Teague, who’s leaving the annuity product line after a 10-year stint at the helm. Many of you know Jim, or you may have read his articles in National Underwriter and other magazines. Jim is beginning another chapter of his career with The Standard, and we all wish him the best.
Check Out Our New Rate Flyers
We've just released a new series of customizable rate flyers designed for your target markets. If you’re a contracted producer with The Standard, you can now request these product specific marketing flyers, all with a fresh new look and feel.
Our Compliance Department has already reviewed the flyers’ compliance with state advertising regulations, and we've had them approved by the state insurance departments that require advertising filings.
We're showing just one of six new designs here. To access the entire portfolio, please visit standard.com/annuities/ and navigate through Find Forms and Materials. To order a flyer personalized with your contact information, simply email annsales@standard.com with the product and flyer design you want customized. We'll return a PDF file to you within two business days.
We’re looking forward to putting these marketing tools to work for you!
Rich Lane
Director, Sales & Marketing
Reflections From The Past Decade
By Jim Teague, Vice President for Individual Annuities at The Standard
Before I move on to my new role as regional director for the southwestern region of The Standard’s Individual Disability Insurance business, I want to share a look back at the challenges, progress and importance of the annuities business to our clients.
Producer Advisories
Please review the AML training requirements and state-specific advisories as they apply to you.
- Required Anti-Money Laundering (AML) Training View
If you have written an annuity with us in the past 12 months, and are not a registered representative of a broker-dealer, or have not taken the 2010 AML training offered by LIMRA through another insurance carrier, you have already received a letter from us asking that you complete the required training. You can take the training online through LIMRA, in less than an hour. Read on for a step-by-step guide.
- Wyoming, Rule 62, Use of Professional Designations and Senior-Specific Certifications View
- Oklahoma, Rule 365:25-3-21: Continuing Education for Oklahoma Annuity Producers View
- West Virginia, Use of Professional Designations and Senior-Specific Certifications View
Form 5498: Frequently Asked Questions And Answers
The 2009 5498 forms were mailed out in May 2010 to certain IRA policyowners. Here are answers to frequent calls we’ve been receiving.
The New NAIC Model Annuity Suitability Regulation: A Closer Look
By Calvin E. Eib, JD, LLM Senior Attorney
In our May Newsletter we advised you that the National Association of Insurance Commissioners (NAIC) has adopted a new Suitability in Annuity Transactions Model Regulation (Model Reg). As expected, state activity has already begun: Wisconsin adopted the Model Reg with a few minor changes (effective date: May 1, 2011), and the Iowa Insurance Division has proposed a rule which is substantially similar to the Model Reg (proposed effective date: January 1, 2011). More states are expected to follow.
What will this mean to you when the Model Reg is enacted in your state? Here is an overview of five key provisions.
Annuities Get A Behavioral Finance Makeover
By Nevin E. Adams, JD, Editor-in-Chief of PLANSPONSOR and PLANADVISOR Magazines (published by Asset International, Inc)
Reprinted by permission from Asset International, Inc., May 17, 2010.
An appreciation for the influences of behavioral finance has had a critical impact on retirement plan designs – so what about applying those principles to the decumulation phase?
To explore the alternatives and implications, Allianz worked with Professor Shlomo Benartzi of UCLA to reach out to a number of academics in the field, several of which were on hand at a meeting in New York City to present some of those findings and their implications.
The findings, which Allianz said it submitted as its response to the February request for information by the Department of Labor and Treasury Department on retirement income products, was produced under the title "Behavioral Finance and the Post-Retirement Crisis," broadly defined as being "about outliving your assets."
Indeed, while the issues attendant with crafting an effective retirement income solution are many, much of the panel’s discussion was oriented toward the challenge presented by longevity risk, simply stated the risk of outliving one’s savings. To kick things off, Benartzi used the example of ten high school friends who retire at age 65. Of those, Benartzi said that the first of the ten would die just four years into retirement, at age 69, while the last in the group to die would, according to statistics, not die until age 99.
This post-retirement crisis is magnified by the poor financial decision-making of retirees, who according to the research presented, pay too much attention to recent stock market performance (those retiring after stock market increases of six to 12 months are much more likely to select the lump sum option rather than lifetime income), have trouble making financial decisions, and are "hyper" risk averse.
"Nudging" The Annuity Decision
Dr. Alessandro Previtero of UCLA highlighted a finding that would seem to defy "common wisdom" about annuities, specifically the reality that, when given a choice to pick a lump sum as well as an annuity in a defined benefit plan, the vast majority opt for the lump sum. He cited a study that found that in a period from 1999 to 2005, only 2-6 percent of retirees elected guaranteed lifetime income when it was available in their 401(k) plans – much lower than expected, and a disparity he referred to as the "Annuity Puzzle" (the puzzle being why people don't choose annuities).
Annuity News is an online newsletter for annuities producers of The Standard.
Subscribe now.