CommInsure ramps up annuities push

03-Jun-2015

By Julie May

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CommInsure has introduced lower minimum investment amounts for its annuities as the Commonwealth Bank of Australia (CBA) insurance arm focuses its attention on further growth in Australia’s annuities market.

CommInsure head of annuities George Lytas yesterday said the group was enhancing its service offering and educating advisers and investors about the benefits annuities could provide, particularly for those seeking regular income streams in retirement.

“We see significant opportunities for Australia’s annuities market, particularly as retirees are living longer and demand for guaranteed retirement income products is growing,” Lytas said.

Lytas pointed to statistics that showed historically Australia had a low investment of 5 per cent in annuities in contrast to countries such as Switzerland at 80 per cent, the United Kingdom at 75 per cent, Chile at 70 per cent and Denmark at 50 per cent.

He also referenced research released by Investment Trends in April that indicated advisers’ intention to use annuities in Australia had risen to 59 per cent in 2015, compared to 49 per cent in 2014, with consumer demand driving increased use of the income guaranteed-style products.

“We believe the annuities market in Australia will grow as awareness builds about the benefits that annuities can provide in addressing longevity risk in retirement,” he said.

“The ‘2015 Intergenerational Report’ showed that a retiree at age 70 today can expect to live for another 17 years for a male and another 19 years for a female [and] many people don’t account for the fact that their retirement savings need to potentially last to age 90 or beyond.”

He said allocated pensions performed well for many retirees, however, as they were living longer, their allocated pension balance might not last the distance.

“Recent research shows that a combination of an allocated pension and a lifetime or deferred annuity can often provide superior outcomes to an allocated pension alone,” he said.

“We believe annuities can act as the ideal form of insurance in retirement, guaranteeing that no matter how your other investments have performed, or how quickly you have used up your retirement savings, you still have a guaranteed income to support you.”

CommInsure said it had updated the product disclosure statement for its annuity products, providing a new online application form for advisers to complete through its online quoting tool and also offering a new reinvestment option for clients.

Other key enhancements included reducing the new minimum investment amount for CommInsure annuities to $10,000 from $20,000, and offering competitive rates across its full range of annuities, including short-term, long-term and lifetime income annuities.

Meanwhile, CBA’s Colonial First State business is set to make annuities available through its FirstWrap and FirstChoice platforms this year in what the company said would be an Australian first.

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