AIICO Insurance Plc office
An underwriting firm, AIICO Insurance Plc, has reiterated its commitment to providing annuity service to Nigerians to deepen insurance penetration in the country.
The Managing Director/Chief Executive Officer of the firm, Babatunde Fajemirokun, made the assurance at the third edition of the underwriter’s yearly media training organised for journalists, in Lagos.
Fajemirokun, who was represented by the Head of Strategic Marketing and Communications, Segun Olalandu, said the insurer is doing everything possible to expand its annuity business in order to take advantage of its inherent opportunities in the market.
Olalandu, who described the annuity business as a game-changer for everybody, noted that the insurer is committed to a strong and effective annuity service.
According to him, a lot still needs to be done to drive the business in Nigeria. He added that “we are not there yet, but step by step, we will get there.”
While referring to the importance of the alliance between AIICO Insurance and journalists in Nigeria, he said: ‘’our partnership, especially in respect of the training on an annuity is an indication of a commitment to the growth of this business.’’
He said AIICO has strategically repositioned the annuity department for effectiveness and growth.
While appreciating journalists for their support of industry progress, he charges them to make good use of the training to enrich their knowledge on the annuity “so that when you are reporting on the subject matter, you will be able to tell the stories accurately”.
Speaking on the theme of the training, which is, “Understanding Annuity Business”, Senior Manager, Business Development, AIICO Insurance, Victor Owotorose, stressed the importance and benefits of annuity to clients and the growth of the insurance industry.
Annuities, he said, are insurance contracts that promise to pay customers regular income immediately or in the future.
According to him, a deferred annuity has an accumulation phase followed by a disbursement (annuitisation) while an immediate annuity converts a lump sum into cash flows from day one.
Owotorose said an annuity can be bought with either a lump sum or a series of payments contributed over time, adding that it comes in three main varieties—fixed, variable and indexed—each with its level of risk and payout potential.
The income received 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 rates.
Owotorose defined annuity as a contract between “you and an insurance company in which a customer makes a lump-sum payment or series of payments and, in return, receives 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, customers can choose when wanting to annuitise contributions—that is, start receiving payments.
He stressed 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. They can choose to receive payments for a specific period, such as 25 years, or the rest of their 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.”