New “Future Income” Annuity Setting Sales Records at New York Life
$100 Million Milestone Reached in Record Time
NEW YORK, N.Y., November 8, 2011 — New York Life Insurance Company said its new Guaranteed Future Income Annuity1, a new flexible way to generate a pension-like stream of income in the future, is far exceeding expectations in terms of sales since it was launched on July 11. In fact, the amount of premium in applications for Guaranteed Future Income Annuity has reached $100 million in just three months.
“The current pace of applications of Guaranteed Future Income Annuity represents more than 20 percent of all income annuity sales at New York Life, making it the fastest off the blocks of any New York Life annuity product launch in memory,” said Chris Blunt, executive vice president and head of Retirement Income Security. Mr. Blunt said the sales estimate for 2011 was shattered in the first ten weeks the new annuity was on the market.
The product allows a policyholder to make an initial premium payment of at least $10,000 and set an income start date in the future, at which time they will begin receiving guaranteed income payments for the rest of their life. Between the initial premium date and the income start date, the policyholder can continue to make premium payments in smaller increments, and can defer or accelerate their income start date as personal needs change.2
The core audience for the Guaranteed Future Income Annuity is a pre-retiree in the age range of 55-65, who plans to retire in 5-10 years and is seeking ways to efficiently generate a guaranteed income in retirement. These individuals have found that the Guaranteed Future Income Annuity helps to hedge against some of the market risk in their portfolio during the final years of their retirement income planning while providing an opportunity to generate higher guaranteed income payouts than they could achieve elsewhere.
Guaranteed income solutions are particularly attractive given recent market conditions and the likelihood that consumers in this market are allocating some of their assets to safe, but low-yielding fixed interest investments. For example, a 57-year-old male, who is approaching retirement, might typically move a portion of his portfolio into a five- year CD to prepare for the transition from accumulating savings to generating retirement income. In today’s environment, a five-year CD may yield around 1.20%.3
Alternatively, by investing in the Guaranteed Future Income Annuity, a 57-year-old man could guarantee a 7.8% lifetime annual payout rate at age 624. If the primary purpose is to generate a guaranteed income for life, instead of preserving his principal or maintaining a level of liquidity, Guaranteed Future Income Annuity may be a more effective option for him.
The product has also been well-received by working Americans who can invest each year to help build a pension-like guaranteed retirement income for the future.
Mr. Blunt said, “The concept of a pension is certainly not new, but paying for a pension-like stream of income with cash rather than years of service is. Once pre-retirees understand that they can create their own pension-like income stream similar to what a traditional pension once provided, they want to buy. Given its early success, we believe the Guaranteed Future Income Annuity is striking a chord with Americans looking to recover lost income and find a future retirement income they can guarantee, and we are delighted to expand the availability of this product to millions more Americans through our distribution partners.”
New York Life Insurance Company, a Fortune 100 company founded in 1845, is the largest mutual life insurance company in the United States* and one of the largest life insurers in the world. New York Life has the highest financial strength ratings awarded to any life insurer by all four of the major credit rating agencies: A.M. Best (A++), Fitch (AAA), Moody’s Investors Service (Aaa), Standard & Poor’s (AA+).** Headquartered in New York City, New York Life’s family of companies offers life insurance, retirement income, investments and long-term care insurance. New York Life Investments*** provides institutional asset management and retirement plan services. Other New York Life affiliates provide an array of securities products and services, as well as retail mutual funds. Please visit New York Life’s Web site at www.newyorklife.com for more information.
1Issued by New York Life Insurance and Annuity Corporation (NYLIAC) a wholly-owned subsidiary of New York Life. Available in jurisdictions where approved. Guarantees are subject to contract terms, exclusions and limitations, and the claims-paying ability of NYLIAC. This contract has no cash surrender value and no withdrawals are permitted prior to the income start date. Income payments are guaranteed at least as long as the annuitant is living, provided the annuitant is alive on the designated income start date. Contracts in which a Life Only payout option is selected do not provide a death benefit either prior to or after the designated income start date.
2The ability to move the income start date is not available for the Life Only option and it can only be moved back a maximum of five years from the original income start date.
3National average APY five-year CD rate as per Bankrate.com, November 2011. CD does not require distribution of principal and as such, principal becomes available again, whereas each GFIA payout includes interest and return of principal. CDs are FDIC insured up to $250,000 per depositor through 12/31/2013, after which the insurance limit will return to its previous level of $100,000.
4The GFIA rates are based on preliminary pricing as of November 2011, for Life Only option. Payout amounts are for illustration purposes only and will vary depending on each specific situation. Rates are subject to change.
*Based on revenue as reported by “Fortune 500, Ranked within Industries, Insurance: Life, Health (Mutual),” Fortune Magazine, May 5, 2011. See http://money.cnn.com/magazines/fortune/fortune500/2011/faq/ for methodology.
**Source: Individual Third Party Ratings Report as of 8/23/11.
***New York Life Investments is a service mark used by New York Life Investment Management Holdings LLC and its subsidiary, New York Life Investment Management LLC.