The sale of immediate annuity life insurance products have slumped to their lowest level since being made exempt from the social security assets test in 1998, the latestDexx&rquarterly report on the life insurance industry has found.
According to the report, the sale of immediate annuities fell by 24.6 per cent to $2.6 billion in the twelve months to the end of December last year.
The result was a dramatic reversal in the fortunes of the products which grew by $3.5 billion in 2000 and $2.7 billion in 1999.
By comparison, the sale of allocated pensions and annuities continued to grow in 2001, increasing by 5.4 per cent over the twelve month period to total $4.6 billion.
According to Dexx&r, the figures confirm the preference by both investors and financial advisers for allocated pensions and annuities, despite the fact they do not enjoy the same tax exemptions as long term life time annuities.
“The continued growth in sales of allocated pensions / annuities indicates that retiree and adviser preferences are clearly biased towards allocated pensions / annuities at the expense of complying immediate annuities,” Dexx&r says.
However, even the sale of allocated annuities was down on previous years. The sale of allocated annuities had grown by about 21 per cent in both 1999 and 2000.
According to the report, MLC was the biggest seller of allocated annuities in 2001, writing over $1 billion in new business.
AMP, which sold $867 million worth of allocated annuities and the Commonwealth Bank, which sold $722 million, followed MLC.
The report also found that overall the sale of single premium life insurance products, which include both allocated and immediate annuities as well as superannuation and single premium products, decreased by just over 2 per cent to $32 billion for the year.
