The insurance industry always recognizes that the term “annuity” is not always received well. A recent survey report also explored that the term ‘Guaranteed income’ is preferred over ‘annuities’ among the mass community.
The survey is conducted among 1,000 U.S. residents over the age of 30. The researchers found an interesting result that a “guaranteed stream of income” made people more willing to put more of their money in. On contrary, when it is called an “annuity” they are less likely to buy them. The behavioral scientist at Morningstar, Stan Treger said, “People are more open to guaranteed income than an annuity.”
People also prefer immediate annuities over deferred annuities. Associate director of policy research at Morningstar, Jasmin Sethi said, “They’ve had a lot of historical issues with fraud, which has not totally gone away, although they are more regulated than they have been in the past.”
She also said, “Annuities are not used very much today. However, the guaranteed income they provide has the potential to make people happier. People like to know how much they can spend. They like to not have to guess. People also have a very hard time dealing with longevity risk.”