Disclaimer: Interest rates change often. This article will be updated on a quarterly basis, but rates may change between those updates. At any time, you can review current annuity rates here, and you can download our 5-Year Annuity Tip Sheet, which is updated regularly, here.
Fourth quarter is officially here! MYGA rates have really remained steady, FIAs are gaining even more traction, and October is a big month for CDs coming due. Here's what you need to know about the annuity space in Q4 of 2020.
Talk to Clients About Maturing CDs
October is really a great month for certificate of deposits, or CDs, coming due. It's just one of those months.
If you can ask your clients, there's a good chance that if they do have a CD, it might be maturing in October. It's just a CD month.
The national average for a 5-year CD right now is 0.37%. If it's a 3-year, it's 0.29%. If it's a 1-year, it's 0.18% (FDIC).
We have Multi-Year Guaranteed Annuities ranging from one year to the most common length of five years. We even have them as high as 15 years. So, this might be a good time for agents to really look at that CD money, or bank money in general.
Your clients can get a much more attractive return. Consider the 0.18% 1-year CD rate versus our best 1-year rate at 1.75%.
The 5-year is also a big difference – our best 5-year is at 3.35%, so when you compare that to 0.37%, you're talking about significant money! Our MYGAs are compound interest and tax-deferred, and CDs are not tax-deferred.
So not only can your clients get a much better return, but they also unlock some other nice features.
MYGAs Are Steady
The MYGAs have really remained solid. Upstream dropped their rates on October 1st pretty significantly. But we look for them to pick it back up in 2021.
Sentinel, ACL, and Equitable all have steady MYGA rates. They've been steady for a very long time now. Equitable's service is outstanding, and Sentinel and ACL offer extra features like free withdrawals a la carte.
Rates were constantly changing during the heat of the COVID-19 situation, and thankfully, I don't feel that rollercoaster anymore. Rates are steady. We always hope a carrier will jump back in with a 4% rate, but we have no indicator of that right now.
You can get the 5-year MYGA tip sheet to get a quick look at the rates and key features. This is updated regularly. Once you download it, you join our updates list, and I'll email you every time something changes.
Equitable's short-term MYGA is at 2.30% for only a 2-year term, so it's less of a commitment for your client, and it's at a great rate. Their 2-year rate is even higher than most of our 3-year options, so it's a better rate at less of a commitment.
If you visit our Annuity Rates web page that's updated constantly, you'll see the best annuities highlighted, and that can help narrow down your options depending on which carriers you're contracted with and what's available in your state.
(Not sure on state availability? Just get in touch with me, Kirk Sarff, and I'll help you out. Call me any time at 888-780-7676.)
FIAs are On the Rise
We also just updated the rates in our Teton presentation if you haven't downloaded that yet:
We now have policies that have been on the books for over a year now. When those clients reviewed their allocations, they've been really pleased – especially through COVID-19. They got some really great returns.
Overall, FIAs have really picked up for our agents.
Plus, I do want to remind you that FIAs are a little more than double the commission of a MYGA. When looking at the 14-year, it’s really almost four times the commission of a MYGA.
- What is the Equitable Teton™ Fixed Index Annuity, and How Does It Work?
- Equitable Teton™ Fixed Index Annuity Client Presentation
- What Is the Equitable Denali™ Lifetime Income Annuity, and How Does It Work?
- How to Sell Barclays Atlas 5, a New Addition to Equitable's Teton FIA – (due to Barclays compliance, you will have to log into our website to read this one)
Use E-Apps for Your Annuity Business!
COVID-19 forced a lot of producers to embrace e-Apps, and many of them realized just how much easier and better they are than paper.
Hopefully, Upstream will get around to an e-App, but most of our other carriers already have them. Equitable, Sentinel, ACL... they all have e-Apps. They're the same Firelight platform as well so they all look about the same.
I look forward to the day when e-Apps are all that's offered. There are just so many mistakes with paper apps – just little stuff – and it causes a drag on the process.
I'm here to troubleshoot and answer any questions you might have along the way if you're new to e-Apps.
Overall, everything is steady right now, which is really nice. I do think we'll see some rates go up a bit in 2021, but for right now, I don't see any of our carriers offering that magic 4%.
However, anything can change, and I know it only takes one or two carriers to come out with a great rate. I'll keep you posted on any changes.
New to annuity sales?
Annuity sales are a huge opportunity for independent agents in the senior market. If you want to learn how to sell annuities to seniors, you've come to the right place!
Check out our complete guide here: The Ultimate Guide to Selling Annuities In the Senior Market