Steve Parrish

At a meeting of financial advisors, I was recently asked, “do you actually think life insurance is an investment?” My inquisitor was making more of a statement than asking a question, so she was surprised by my answer: “I can tell you that life insurance was an investment for me; one that I’m benefiting from now.”

People don’t understand annuities. They often confuse how annuities are used, how they work, and how they are taxed. In fact, research commissioned at The American College of Financial Services found that while consumers often hear about and have had annuities recommended to them, almost none of those surveyed understood the specifics of annuities.

Retail companies sometimes sell additional product by placing their wares in more than one location. At grocery stores, pita bread may appear both in the bread section and near the cold cuts. Candy shows up in the candy aisle, but also near checkout. This is a concession to the fact that people have different ways of classifying the products they choose to buy.

While many financial experts see the value of lifetime income in retirement planning, annuities remain a misunderstood financial product among consumers who are looking for greater security.

Many Americans who are contemplating retirement look back to the days when their parents or grandparents received lifetime incomes from their employers. For them, employer pensions continued for the lives of both husband and wife, and the monthly check was often adjusted upward to reflect the cost of living.

There are two major trends occurring with the insurance and risk management aspects of financial planning. First, many traditional life insurance agents are becoming financial planners, not just in title but in terms of their products, services, and fiduciary responsibilities. Second, financial planning is rapidly transitioning from a sales model to an advisory model.