Magazine article American Banker

Keyport Tries to Calm Investors Worried about Variable Annuities

Magazine article American Banker

Keyport Tries to Calm Investors Worried about Variable Annuities

Article excerpt

If the experience of one insurance company is anything to judge by, turbulence in the stock and bond markets is taking its toll on customers who have bought variable annuities through banks.

For weeks, Boston-based Keyport Life Insurance Co. has been fielding phone calls from nervous customers who want advice on how to safeguard their investments from further market bumps.

"They're saying, 'What can I do? This is my retirement money,'" said Deborah Re, head of the customer service center at keyport.

Coaching and Counsel

In response, Keyport's customer service representatives have been spending a lot of time coaching investors about alternatives and talking them through their anxieties.

Although many customers are sticking with their investments, some are losing patience. Some say they want out, said Michael McGoldrick, a Keyport customer service representative. "They've had enough."

Keyport's observations merit attention because annuities -- insurance contracts that are invested in a pool of securities -- have surged in popularity at banks. One reason: under tax law, earnings on annuities aren't taxed until the proceeds are withdrawn, so the investments are considered ideal for retirement planning.

Variable Risk

While many bank customers are familiar with fixed annuities, which pay a preset yield, they may be less familiar with variable annuities, which have boomed this year. Variable annuities invest in mutual funds and pay a return that varies depending on the performance of the fund chosen. …

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