20
ID Trends
2019
Never surrender the
next generation’s wealth
Since the stock market crash of 2008, sales of fixed indexed annuities (FIA) have experienced
incredible growth, especially compared to immediate fixed annuities and variable annuities. In
fact, results from the LIMRA Secure Retirement Institute Annuity Sales Survey, show FIA sales
broke records in the first two quarters of 2019.
This growth can be credited to a low interest rate environment, a historic bull market, and
an aging US population that is nearing the age of retirement or already in retirement. These
individuals are looking for preservation of principal, while participating in higher returns,
without all the market risk.
John Zepeda is the Director of
Business Development for Stratus
Funding, a subsidiary of J.G.
Wentworth located in Chesterbook,
PA, who has purchased more than
$10bn in aggregated payment
streams. John received his BS from
the University of Pennsylvania and
holds a series 7 and 66 license.
Contact Mr. Zepeda at 484-434-2461
or [email protected]
New benefits to consumers
This shift in the popularity of a product feature, from what was a traditional immediate fixed
annuity to a fixed indexed annuity, can deliver new and important benefits to consumers. As
a purchaser of annuities, Stratus Funding is seeing the impact of an aging population and the
beginnings of the greatest transfer of wealth in US history. As noted by Cerulli Associates,
projections are that nearly $68.4 trillion in wealth will pass hands to heirs over the next
25 years. A growing percentage of the policies Stratus Funding is reviewing are inherited
annuities in payout and FIA purchased over 5 years ago with surrender penalties.
As annuity products evolve so too will liquidity features. For policies that have been
annuitized or are in payout, there are not many options for liquidity. On the deferred side,
there are liquidity features built in, and for some annuity owners it’s a matter of when they
do seek liquidity, are surrender charges too substantial to make a liquidity event sensible.
Stratus Funding sees examples of annuity owners who are looking to pass along not just
life’s lessons and possessions to their heirs but money. Many of the annuities sold over the
past 10 years, such as two-tiered annuities with a 12% annuitization bonus, stipulated the
policy must be annuitized for a minimum of 10 years to get the full account value.
Never surrender continued on page 22