Annuities are among the hottest investment products sold by banks. And John Rosensteel, president of Keyport Life Insurance Co., Boston, thinks they're going to get even hotter.
According to Mr. Rosensteel, President Clinton's health care reform will be a boon for annuities.
People will tap into these tax-deferred investment products as a way of taking up the slack for gaps in medical coverage in their later years, he told the American Banker in a recent interview.
Q.: It's been well publicized that Americans save too little. Rising health care costs haven't forced people to step up their savings efforts. How would that change under President Clinton's health care reform?
ROSENSTEEL: Based on what I've seen and heard, the whole issue of planning for health care down the line will take on greater importance than it has before. There will be more implications for retirees.
Q.: What are some some of the implications?
ROSENSTEEL: Individuals who continue to want access to choice will have to pay more under the President's proposal than they do today. I also anticipate gaps in Medicare coverage.
Q.: Are you saying people are in. for a rude awakening?
ROSENSTEEL: Individuals who have relied to a greater extent on anticipated Social Security or employee benefit plan payouts will have to think again. Those avenues didn't anticipate the higher costs people will have to take on in retirement.
Q.: How does this make annuities more attractive?
ROSENSTEEL: Annuities will allow individuals to effectively prepare for the potential of increased medical costs. Annuities allow the collection of monies to address whatever needs individuals may have.
Q.: What can banks do to position themselves for the increased demand?
ROSENSTEEL: Banks need to do more to promote and educate their customers, especially with the coming changes in health care.
Banks can provide their own analysis of the health care proposal and identify ways for customers to anticipate and prepare for the potential changes that will come. They have tremendous opportunity to help customers as this health care debate unfolds.
