How has the continuing low interest rate environment impacted the annuity market?
I remain intrigued when I see people placing fixed deferred annuities instead of variable annuities with guaranteed minimum income benefit riders (or other riders). Why lock in a ceiling of some of the lowest interest rates in history (e.g., three to 4.5 percent), instead of having a floor of a higher interest rate (e.g., five percent)? As stated above, too many investors still have too much in cash (on the sidelines). To them, it’s not about risk tolerance, but their perceptions of stock market risk. So, they missed the large increases. Variable annuities with proper lifetime benefits hedge investment performance. It gives investors the “permission” to get back into the markets and then to “buy and hold.” What could be better than, “heads you win, tails you get five percent (higher or lower depending on product)?” I have often written about the way many investment advisors (analyticals) present the facts when it is emotions that are driving their client’s behavior. The example I have
