More financial advisors are turning to insurance products to boost fixed income for clients
April 2, 2019 by CNBC
Economic and demographic shifts are making life insurance and annuities more attractive options for fixed income, financial advisors say.
“In a typical 60/40 portfolio, because bond returns are at a 50-year low, I’m seeing people moving funds from bonds to either life insurance or income annuities as a substitute,” said Tom Hegna, an insurance industry consultant in Fountain Hills, Arizona.
As baby boomers enter retirement, Hegna is also observing a shift toward income annuities vs. traditional deferred annuities. In terms of product innovation, he noted:
- Deferred annuities are now adding withdrawal riders, which provide some liquidity flexibility (until all the money in the account is spent).
- Some life insurance policies and annuities have begun adding long-term care coverage riders, which may allow income to double or triple to pay for certain types of care.