Originally Posted by henrya
you are right. I guess the question I have is: If I have a 65 year old wonam that is getting 5.5% from a CD what can I offer her that will allow her to take just the interest out that is better than the cd. I need annuities 101 I think. I am licensed to sell them but know nothing about them.
She's not going to get a better return than her CD. CD's are considered short term investments and with the Federal Reserve raising the short term rrates 17 consecutive times, CD rates have moved upward.
Annuities are generally tied to long term treasuries due to the regulation requirements on the insurance company (which a bank doesn't have). And long term rates have actually dropped over the past several months. As a matter of fact, the 10-year Treasury is at 4.59%. So it would be impossible for an insurance company to offer a guarantee over a long term investment much higher than what we see in the 10-year treasuries.
The only possible advantage she would have with the annuity is that the rate could be guaranteed for a longer period of time than the CD. People who played the CD switcharoo in the late 90's through 2003 or 2004 saw their rates go from 6% or so down to 1%. Had they been locked into something paying maybe 5%, they would have been real happy in 2002, 2003 and 2004.
It may be possible to get her a guarantee of just under that CD rate for maybe 5-7 years. But you're not likely going to find a fixed annuity with a 5.50% guarantee.