AIICO Insurance Plc has says its commitment to annuity pension service is a play out of its grasp of the master card of the business taking it out above the threshold of available annuity options.
The managing director/CEO, AIICO Insurance Plc, Mr. Babatunde Fajemirokun, made the disclosure at the 3rd Edition of AIICO Annual Media Training organised for members of the National Association of Insurance and Pension Correspondents (NAIPCO), in Lagos.
Fajemirokun, who was represented at the occasion by the Head, Strategic Marketing and Communications, Mr. Segun Olalandu, said AIICO Insurance leverage on annuity puts it on the platform to establish the several addons for the annuitant in the longevity business that competitors are relinquishing preferring instead the short term insurance business.
The AIICO Insurance boss, said because of the company’s long term strategy edge, annuity business has become a game changer and it is committed to a robust and effective annuity service. For other businesses, he said the industry has a lot more still to do to deepen the business in Nigeria, adding that ‘we are not there yet, but step by step, we will get there.’
Nonetheless, he said the collaboration between AIICO Insurance and NAIPCO, is a “partnership… journalists, especially in respect of today’s training on annuity is an indication of our commitment to the growth of this business,’’ and should therefore, use knowledge gained to tell stories accurately.
Speaking on the theme of the training, ‘Understanding Annuity Business,’ AIICO Senior Manager, Business Development, Mr. Victor Owotorose, stressed the importance and benefits of annuity to annuitants and the growth of insurance industry, because its structured to pay regular income immediately or in the future.
According to him, a deferred annuity has an accumulation phase followed by a disbursement (annuitisation) phase; while an immediate annuity converts a lump sum into cash flows from day one.
Owotorose said, annuity can be bought with either a lump sum or a series of payments contributed over time, adding that, annuities come in three main varieties—fixed, variable, and indexed—each with its own level of risk and pay-out potentials.
The income receive from an annuity, he said, is typically taxed at regular income tax rates which are usually lower unlike when calculated with long-term capital gains rate.
Owotorose defined annuity as a contract between “you and an insurance company in which you make a lump-sum payment or series of payments and, in return, receive regular disbursements, beginning either immediately or at some point in the future. The goal of an annuity is to provide a steady stream of income, typically during retirement.
‘’Many aspects of an annuity can be tailored to the specific needs of the buyer. In addition to choosing between a lump-sum payment or a series of payments to the insurer, you can choose when you want to annuitize your contributions—that is, start receiving payments. An annuity that begins paying out immediately is referred to as an immediate annuity, while one that starts at a predetermined date in the future is called a deferred annuity.
‘’The duration of the disbursements can also vary. You can choose to receive payments for a specific period of time, such as 25 years, or for the rest of your life. Of course, securing a lifetime of payments can lower the amount of each check, but it helps ensure that you don’t outlive your assets, which is one of the main selling points of annuities.
‘’Annuities come in three main varieties: Fixed, variable, and indexed. Each type has its own level of risk and pay-out potential. For any of these, it is often structured as a deferred annuity,’’ he explained.