Pacific Life Releases White Paper—Variable Annuities: Less Is More
Newport Beach, Calif. (September 15, 2009) – “While the market for ‘feature-rich, higher-cost’ guaranteed benefits will surely remain, it is almost certain that a segment of the population would be better served by simplified, lower-cost, more easily understood products,” according to a new white paper released by Pacific Life Insurance Company.
The white paper, “Variable Annuities: Less is More,” provides a perspective on the array of products on the market and how consumers face a significant challenge in understanding which products might best meet their total savings and retirement needs. The paper, commissioned by Pacific Life and written by Oliver Wyman, an international management consulting firm, clearly outlines that total benefits—greater accumulated savings and guaranteed income combined—can be enhanced with lower-cost benefits. The white paper outlines:
- How some investors may benefit from simpler, lower-cost guarantees.
- The effects of “fee drag” on account values and income.
- How perceived simple guarantees make fewer promises, but are dramatically easier to understand.
According to Geoffrey Hancock, one of the authors of the paper, “as we pointed out in our earlier study, ‘Variable Annuities in an Uncertain World’, despite higher fees for substantial guarantees, insurers are generally not charging sufficiently under today’s market conditions.” The white paper concludes that many insurers have met the call to action: fees are being raised or products are being redesigned to bring the economics back into greater balance.
“Pacific Life acted early and responded appropriately to the changing product landscape,” said Dewey Bushaw, Executive Vice President of Pacific Life’s Annuities & Mutual Funds Division. “The future should be brighter for those that weather and conquer the challenges as described by Oliver Wyman.”
This white paper, “Variable Annuities: Less is More” as well as the white paper “Variable Annuities in an Uncertain World: How Experience and Expectations will Create Change in the Marketplace,” are available to financial professionals at wirehouses, broker/dealers, and other financial institutions that have selling agreements with Pacific Life.
About Pacific Life
Offering insurance since 1868, Pacific Life provides a wide range of life insurance products, annuities, and mutual funds, and offers a variety of investment products and services to individuals, businesses, and pension plans. With more than half of the 100 largest U.S. companies as its clients, Pacific Life is also a member of the Insurance Marketplace Standards Association (IMSA), whose membership promotes high ethical standards for the sale of individual life insurance and annuities. For additional company information, including current financial strength ratings, visit the About Pacific Life section of this Web site.
Pacific Life refers to Pacific Life Insurance Company and its affiliates, including Pacific Life & Annuity Company. Client count as of April 2009 is compiled by Pacific Life using the 2009 FORTUNE 500® list.
You should carefully consider an investment’s risks, charges, limitations, and expenses. This and other information about Pacific Life and Pacific Life Funds are provided in the applicable product and underlying fund prospectuses. These prospectuses are available from your registered representative or by calling (800) 722-4448. Read them carefully before investing.
Insurance products are issued by Pacific Life Insurance Company in all states except New York and in New York by Pacific Life & Annuity Company. Product availability and features may vary by state. Each company is solely responsible for the financial obligations accruing under the products it issues. Product and rider guarantees are backed by the financial strength and claims-paying ability of the issuing company and do not protect the value of the variable investment options.
Variable insurance products issued by Pacific Life Insurance Company and mutual funds issued by Pacific Life Funds are available through licensed third-party broker/dealers and distributed by Pacific Select Distributors, Inc. (member FINRA & SIPC), a subsidiary of Pacific Life.
About Oliver Wyman
With more than 2,900 professionals in over 40 cities around the globe, Oliver Wyman is an international management consulting firm that combines deep industry knowledge with specialized expertise in strategy, operations, risk management, organizational transformation, and leadership development. The firm helps clients optimize their businesses, improve their operations and risk profile, and accelerate their organizational performance to seize the most attractive opportunities. Oliver Wyman is part of Marsh & McLennan Companies [NYSE: MMC]. For more information, visit www.oliverwyman.com.
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