Annuity Payouts

The comp on the 5 and 6 year products is already really low and they still don't guarantee the caps....

If they can't guarantee the caps it would be nice to have a bailout clause if the caps are lowered, although that is wishful thinking.
 
Why can't indexed annuites be sold with shorter surrender charges (say 5 years) lower the commissions and guarantee the caps for the full 5 years. At the end of the term you can either renew or cash out. I am not trying to be critical, it just seems it would be fairer to the client.

There are 2 IAs with a 4 year surrender.

There are probably 9 or 10 with a 5 year surrender. Same with 6 & 7 year surrenders. The average street comp is 3%-4% for that range.

Competitive carriers in that range include NWL, AE, AG, GAFRI. AG has a really nice looking 7 year product that has a 1.5% spread and uncapped gains. AE has the same with a 6 year product and a 1.75% spread.


If they can't guarantee the caps it would be nice to have a bailout clause if the caps are lowered, although that is wishful thinking.

GAFRI's 6 year product has bailout caps....
 
The comp on the 5 and 6 year products is already really low and they still don't guarantee the caps....

One major reason they dont guarantee the caps for a significant length of time is because the companies dont know what the price of options will be on a year to year basis. The higher the volatility in the S&P 500, the higher the cost of options and vice versa.

Not to mention it works both ways, why lock in a crappy cap rate when the likely hood is that your cap rates may go up if interest rates improve?
 
Not to mention it works both ways, why lock in a crappy cap rate when the likely hood is that your cap rates may go up if interest rates improve?

Have you ever seen caps increase on an annuity? Ive always wondered if they really are going to rise any once rates start to rise...
 
Unless it's a flex premium product what incentive does the carrier have to raise caps?

that is my thinking as well. rates have declined for so long ive never sold IAs in a rising market, so I honestly have no clue what will happen if the 10y jumps a few percent...
 
Back
Top