May, 2014
Dear Friends and Clients:
Although sales of DIAs are still relatively small ($2.2 Billion in 2013 according to Beacon Research), the growth rate of sales and insurer/advisor/client interest is quite strong. Sales in 2013 doubled compared to 2012 sales, and all indications are that 2014 will be another blossoming year for DIAs.
The emergence of DIAs as new products on the landscape is especially intriguing because they were contemplated in state regulations nearly 40 years ago. One can even argue that DIAs were envisioned hundreds of years ago as a pure form of longevity protection or "annuity". In a sense, DIAs are like the relic found in the attic that is dusted off, polished, and provides incredible new-found value.
What has made DIAs the emerging success story? There are three primary reasons:
- The product has been re-positioned as an integral part of an annuitant's personal pension plan, rather than as highly deferred longevity insurance,
- The three leading DIA insurers to date are large captive-agency mutual insurers who are committed to the product, and
- The product competes well in this low interest rate environment, particularly when the leveraging of survivorship are taken into account.
What's next for DIAs? Two things are clear – first, higher expected sales as the product story is refined and more life companies enter the business. Second, substantial product design variation and innovation, as new product designs uncover the potential that exists in the basic DIA chassis. Such innovation is already emerging.
So congratulations to today's attic treasure – the DIA. What will we find next in our product attic – the pure endowment?
Tim Pfeifer
President |
