“Despite having to navigate various macroeconomic, economic and social challenges, the US life insurance and retirement industry holds significant potential for growth”.

E&Y just published a continuation of a series analyzing the impacts and potential benefits of including insurance products in a retirement plan to help meet the savings and protection needs of consumers.They ultimately concluded that:

• The strategies integrating both a fixed indexed annuity (FIA) and an indexed universal life (IUL) outperform the investment-only approach. There is a significant gain in income, increasing as the allocations increase. With the exception of the 10% FIA + investments strategy, there is also an increase in the legacy values.
• The appropriate strategy for a given investor is contingent on that investor’s individual prioritization of income versus legacy value.

Lionel Lauture  Director, Protection Sales Development Ash Brokerage

And we have some thoughts.

We agree.

We could stop there, but we know the paper is long, full of big words and analyses and not everyone will read the whole thing.

So here are the main points.

They compared six strategies, generating 1,000 scenarios, each containing a time series of interest rates, inflation rates, equity returns and bond returns.

What they compared:

• Investment-only
• IUL + investments
• FIA + investments
• SPIA + investments
• IUL + FIA + investments
• IUL + SPIA + investments

Here are the outcomes of each:

1. IUL combined with investment strategies outperforms investment-only strategy for the given metrics
2. Integrating a FIA with investment strategies significantly outperforms the investment-only strategy in generating retirement income, with an associated small reduction to legacy values
3. Integrated strategies are more efficient than the investment-only strategy
4. Integrated strategies offer investors the flexibility to prioritize their financial goals, whether it be maximizing retirement income, preserving a legacy or finding a balance between the two
5. For investors with a higher risk appetite, integrated strategies remain better

So what?

The researchers at E&Y estimate that by 2050 there will be a $483 trillion retirement savings gap and a $240 trillion protection gap. 

There is a real longevity risk on the table.

So how do we create a “pension-like” solution for your clients that fuel their savings and protect against income gaps?

The products we offer at Ash are uniquely positioned to address these gaps with products that offer legacy protection, tax-deferred savings growth and guaranteed income for life.

We offer annuities, Medicare, long-term care, linked benefit, life and disability insurance with strategies that preserve wealth and maintain lifestyles.

We offer products that support both the accumulation and decumulation phases, able to be customized to different goals and income levels.

We were drawn to this paper, and hope these results resonate with you.

If they do, give us a call.