When the government announced it would includequalified longevity annuity contractsin 401(k) plans, the insurance industry rejoiced. Much has beenwritten about how they answer a need for savers to focus on incomerather than savings and investments. QLACs address the relatedconcern of outliving your savings.
Yet, for all the initial excitement, QLACs have been slow tomove out of the gate. Part of the problem arises from theunfortunate choice of name. By adopting the word “annuity” into itstitle, the QLAC instantly evokes negative connotations among asizable portion of the market. Although a QLAC does, in many ways,function like an annuity, it is really a form of insurance. Ratherthan insuring against premature death, a QLAC insures against abelated death or, in other words, the unexpected longevity of one'slife.
I guess there were other drawbacks to using the word “insurance”instead of “annuity.” The acronym would have been QLIC, which, ifyou say it out loud, doesn't sound too appetizing. We could havecalled it what it is—longevity insurance—but that acronym isn't anybetter. (Say “LI” out loud if you don't believe me.)
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Christopher Carosa
Chris Carosa has been writing a weekly article and monthly column for BenefitsPRO online and BenefitsPRO Magazine since 2011 and is a nationally recognized award-winning writer, researcher and speaker. He’s written seven books, including From Cradle to Retire: The Child IRA; Hey! What’s My Number? – How to Increase the Odds You Will Retire in Comfort; A Pizza The Action: Everything I Ever Learned About Business I Learned By Working in a Pizza Stand at the Erie County Fair; and the widely acclaimed 401(k) Fiduciary Solutions. Carosa is also Chief Contributing Editor of the authoritative trade journal FiduciaryNews.com and publisher of the Mendon-Honeoye Falls-Lima Sentinel, a weekly community newspaper he founded in 1989. Currently serving as President of the National Society of Newspaper Columnists and with more than 1,000 articles published in various publications, he appears regularly in the national media. A “parallel” entrepreneur, he actively runs a handful of businesses, including a small boutique investment adviser, providing hands-on experience for his writing. A trained astrophysicist, he also holds an MBA and has been designated a Certified Trust and Financial Advisor. Share your thoughts and story ideas with him through Facebook (https://www.facebook.com/christophercarosa/)and Twitter (https://twitter.com/ChrisCarosa).
