Deferred income annuities really came into their own in 2012, reaching nearly $1 billion in sales.
While the insurance products remain small compared to other guaranteed lifetime income products, the Insured Retirement Institute believes they will continue to grow into 2014.
"As more companies begin to offer DIA products and as they expand into new distribution channels, DIAs are becoming a viable option for consumers and financial advisors looking for guaranteed retirement income to insure against longevity risk," said Cathy Weatherford, president and CEO of the IRI.
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First introduced several years ago, DIAs provide another retirement income option to financial advisors – and their clients – as they develop plans to protect against longevity risk in a way that best suits each individual client's needs.
Similar to their precursor advanced life deferred annuities, DIAs are designed to provide income later in life to protect against the risk of outliving assets. While ALDAs were never popular, insurers revisited the concept by shortening the deferral period. DIAs also offer more flexibility through, among other features, optional death benefits and liquidity options.
Income on DIA products can start between two to 40 years from issue, but most DIAs are elected with an income start date between five and 15 years from the date of issue.
As recently as last year, only six companies were offering DIAs. Now at least a dozen companies are offering or have filed to offer DIA products.
The average DIA buyer profile resembles that of buyers of variable annuities and fixed-indexed annuities with living benefits. The average DIA buyer is in their late 50s, with most DIAs being purchased by buyers in their early 50s to mid-60s.
Across the industry, the average income deferral period for DIA products is eight years.
One-fifth of Baby Boomers believe that guaranteed income each month is the most important trait of a retirement investment product.
The IRI report studies the origin of DIAs, its features, customer demographics, sales data, and an overview of retirement income strategies incorporating DIA products.
The Insured Retirement Institute is a nonprofit that for 20 years has been a mainstay of service, commitment and collaboration within the insured retirement industry.
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