Lincoln Financial Group has launched i4Life Indexed Advantage, a fixed-indexed annuity (FIA) benefit rider aimed at providing retirement investors with a 'dependable, tax efficient income for life'.
The new i4Life benefit rider is available through a number of indexed annuities provided by Lincoln Financial including New Directions 8, OptiBlend 7 and 10, and OptiChoice 5, 7 and 9 fixed indexed annuities, and is aimed at providing a guaranteed lifetime income.
Lincoln Financial introduced i4Life in variable annuities more than 15 years ago to help clients maximize income, as well as maintain access and control of their investment.
The addition will provide clients with 'a tax efficient stream of lifetime income without giving up access to their investment, and with the added protection of a death benefit for their beneficiaries', according to John Kennedy (pictured), head of retirement solutions distribution at Lincoln Financial Distributors. 'I4Life Indexed Advantage is a powerful financial tool, providing a combination of features and benefits that cannot be found in any other investment option within the FIA industry,' said Kennedy.
Since its introduction in 2000, it has recorded 150,000 transactions including i4Life which represent more than US$30bn of i4Life Advantage assets purchased through Lincoln variable annuity products.
Lincoln's Financial move to improve its FIA offering comes on the heels of the latest market report from Limra Secure Retirement Institute, which recorded a 15% increase in the second quarter of 2017 from first quarter to $15.6bn, although aqctovoty was 4% lower on the year.
Nine of the top 10 companies involved in fixed index annuities have reported quarter-over-quarter growth, according to Limra, which predicts indexed annuity sales will decline 5-10% in 2017. "This fall is in line with our expectations and the usual seasonal decline in the first quarter, but we suspect there are some companies re-evaluating their product mix in anticipation of the Department fo Labor rule," said Todd Giesing, director, annuity research at the Limra Secure Retirement Institute. "We have seen sales with a guaranteed living benefit falling at a much faster rate than products without. In fact, where we are seeing growth is in the structured VA market. In the first quarter, structured VAs grew 60% compared to first quarter 2016. This segment represents about 5-10% of the total VA market."
According to Limra, fixed annuity sales also declined in the second quarter by 7% to $29.2bn with all fixed product lines sales, except structured settlements, experienced declines. In the first half of 2017, fixed sales fell 11% to $56.7bn. The trade body also pointed that first half 2017 annuity sales reached its lowest level in 16 years. Total annuity sales decreased 10% to $105.8bn compared with the first six months of 2016.
Second quarter results for total annuity sales were $53.9bn, a slight uptick from the first quarter, but an 8% decline compared to the same period last year. This is the fifth consecutive quarter of decline in overall annuity sales, according to Limra. It is also the sixth straight quarter fixed sales have outperformed variable annuity sales, which hasn't happened in almost 25 years.
US variable annuity sales stood at $24.7bn in the second quarter, down 8% compared with the same quarter last year, which marks the 14th consecutive quarter of decline in variable annuity sales. Sales from the first half of 2017 were $49.1bn, 8% lower than the first six months of 2016. "A closer look at what's driving the drop in variable annuity sales reveals qualified sales have experienced a more significant decline than non-qualified VAs," said Giesing. "This could be in reaction to the DoL fiduciary rule."
Second quarter qualified variabel annuity sales accounted for 58% of retail variable annuity sales, a 5% decline from the same quarter last year. Sales of fee-based variable annuities increased in the second quarter to $570m, representing 2.3% of the total variabel annuity market. While this is a small portion of the overall market, these products have seen continued to increase in use over last year, according to Limra.
Structured variable annuities have also been increasing, according to Limra. In the second quarter, sales of these products have increased 36%, reaching $1.8bn, which represents 7% of the market. Limra, however, expects variabel annuity sales will drop 10-15% in 2017, totalling less than $100bn.
In addition, fixed-rate deferred annuities (book value and MVA) sales dropped 11% in the second quarter to $9.3bn. Year-to-date, fixed rate deferred annuity sales were $19.4bn, 14% lower compared to 2016 results. Deferred income annuity - which were 31% to just $600m, and single premium income annuity - down by 12% to $2.2bn in the second quarter, also experienced declines.
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