The stars have lined up; a steady stock market and an increasing interest rate market. A recent article from Lincoln Financial Group CEO Dennis R Glass reaffirms that a large and probably long bull run is coming to the annuity and life insurance business.
“You now have a good, growing stock market and slowly rising interest rates – that has to be the best economic climate for the life insurance industry,” Glass said last week, speaking during a conference call with analysts.
The combination of Baby Boomers rolling into retirement, the need for safety and security combined with an increase interest arte market can only mean one thing, life and annuity companies are in the cross hairs. This could not be a better scenario for the consuming public, products will get better, interest rates will increase and a safer and longer income stream will be available.
The article goes on to say:
Passive strategies, those typically employed by indexed funds and indexed annuities; simply seek to match a benchmark. Because they are tax efficient and cheap, investors enjoy a greater portion of a given market’s return.
“Annuities kind of go in the opposite direction from that trend,” Berg said during a question-and-answer session with Lincoln executives.
Because capital gains are taxed as ordinary income rates upon distribution, annuities are relatively tax-inefficient, Berg said. (Wall Street Analyst)