Tuesday, October 7, 2008

Insurance Professionals See Investor Confidence of Retirement-Minded Americans Waning

Top Insurance Executives Weigh-in on the Financial Crisis and the Impact on Consumer Confidence, Retirement Planning at Annual Industry Meeting 68 Percent of Respondents Anticipate Growing Consumer Interest in Variable Annuity Insurance Guarantees for Turbulent Economic Times

PHILADELPHIA, Oct 07, 2008 (BUSINESS WIRE) -- NAVA, Inc., the Association for Insured Retirement Solutions, today announced the results of an opinion survey on the state of the nation's economy and financial markets taken Monday, October 6, at its annual meeting in Philadelphia, Pa. The survey of more than 300 insurance industry professionals was conducted via instant electronic polling. Chief among the survey findings are:
-- 65 percent believe that investor confidence is either flat or falling
-- 99 percent believe that most retirement-minded Americans will take action to address the financial crisis, including: move money into "safer" investments, become more risk adverse, avoid equity based financial products, and even "stash their savings under their mattresses"
-- 68 percent believe that variable annuity "living benefits," specific guarantees against downside market risk, will become more popular with consumers
-- Respondents were split on whether or not the Troubled Asset Relief Program (TARP) will ultimately succeed in stabilizing the financial markets -- 50 percent believe it will, 46 percent believe it will not, and 4 percent had no opinion
"A central objective of NAVA's Annual Meeting this year was to determine how to address deteriorating consumer confidence," said Cathy Weatherford, president and CEO of NAVA. "As such, it was interesting to learn how insurance professionals are addressing their own financial situations during these turbulent times. Rather than succumbing to fear and uncertainty, the majority said they plan on maintaining their long-term retirement planning strategies rather than reduce their market exposure, indicating the confidence that the markets will eventually rebound."
When it came to their views on their personal retirement financial strategies, 77 percent of the respondents reported that they are electing to stay the course with their established long-term plans, rather than making significant near-term adjustments. However, respondents were mixed on their opinion of how the financial crisis will impact consumer confidence over the next 12 months, with 35 percent reporting it will rise, and slightly more (41 percent) reporting that it will fall.
"It's important to remember that the 'stay the course' strategy may not be the right move for individuals nearing or already in retirement who do not have time to ride out the market. For many of these individuals, our members said that a variable annuity can be an excellent option. By offering valuable insurance guarantees to protect assets from market downturns, variable annuities can give Americans the confidence and peace of mind to stay invested in the market long as they need to, knowing that their principal is protected regardless of market performance," added Weatherford.
The NAVA Annual Meeting brings together the nation's insurance, distributor and financial advisor organizations that develop and market retirement income and insurance solutions for Americans, including annuities and variable life products. The meeting is an opportunity for the insurance industry's top experts, visionaries and thought leaders to address the key issues, challenges and opportunities facing the industry, and to develop strategies to better serve the public. As the industry's trade association, NAVA provides educational and informational resources to its members and the public, and also helps protect consumers by encouraging adherence to the highest ethical standards by insurers, distributors and all other participants in its diverse industry.
An annuity is a long-term retirement vehicle offering a combination of insurance benefits, tax-deferred savings and guaranteed lifetime income payments. Variable annuities allow individuals to invest in a variety of underlying fixed and equity funds, and provide returns based on the performance of these funds. Valuable annuity insurance features include beneficiary protection in the form of the guaranteed minimum death benefit, and living benefits which protect against downside market risk. A variable annuity also offers the ability to convert retirement savings into a steady "paycheck" for life, similar to pension plan payments.
The NAVA member opinion survey was conducted via an electronic polling system on October 6, 2008, at the NAVA Annual Meeting in Philadelphia, Pa. More information about NAVA can be found at www.NAVANet.org.
About NAVA
NAVA, Inc., the Association for Insured Retirement Solutions, is a non-profit trade association located in suburban Washington D.C. NAVA provides a variety of services to the industry, including educational forums, research, and conferences aimed at furthering the development and understanding of fixed and variable annuities, income annuities and variable life insurance. NAVA also maintains and supports an educational website for consumers at www.RetireOnYourTerms.com.