June is Annuity Awareness Month! So, let’s discuss a few noteworthy topics occurring in the world of ‘annuities’ right now.
We are all witnessing pronounced rates right now. I was visiting with a couple of long-term annuity agents, and they all agree we have not experienced rates this high in a long time. The question is how long will these exciting rates hang around? That is the golden question; the old saying is “What goes up, must come down”. We can all agree we hope the rates continue to stay at these high levels for the continuous future.
It isn’t just the Multi Year Guarantee Annuity (MYGA) rates that are high right now. The cap rates on Fixed Index Annuities (FIA) are in the double digits.
Another way growth is measured is with the participation rate. It used to be if we received 100% participation it was great news. Now we are experiencing participation rates as high as 390%. There is one unique allocation measured through the S&P 500 called a performance trigger. If the S&P is flat or goes up at all, it will pay the cap rate. Example: If the performance trigger cap is 8.65% and the S&P 500 performance is 1% positive (or at 0 and is not negative), then the customer would make 8.65%.
We have talked in the past, numerous times, about the need for lifetime income. A person can buy an income product in a couple different ways, a Single Premium Immediate Annuity (SPIA) or a FIA with an ‘Income for Life’ rider. With the FIA, you can turn on the income stream immediately or delay until you are ready to receive the income. Did you know you can add a spouse to that income without it becoming a joint policy?
This is a great feature. If something happened to the spouse and they passed away, the income could continue for the surviving spouse without any change in payment. (Note: This is not a spousal continuation.) If the account value went to 0, the payment is still made for the lifetime of the surviving spouse.
When reviewing retirement needs and benefits, another key point to consider is long-term care (LTC). What if you cannot qualify for LTC? Lifetime income policies may offer have a built-in rider that offers extra income to assist with the expenses of LTC. (Note: It is not a LTC policy.)
Bottom line, there is no better time to buy an annuity keep your money safe. Whether you want it to grow like a CD, let it accumulate in a FIA, or have that income for life, all are possible with an annuity. Remember all the annuities we offer are from A-Rated carriers and have the power of zero.
Be safe and enjoy the summer months and let me know how I can assist you and your customers.