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Thankfully, not much has changed in the annuity space since last quarter! MYGA rates are still stable and FIAs are more popular than ever.
I feel a bit like a broken record, but here's a look at the annuity market as we head into the AEP selling season.
MYGAs Are Still Stable
Like last quarter, MYGA rates are still very stable. The last time we saw a MYGA rate change was in June. SILAC has even had the same rate since May 19th.
One shift that has been happening all year long is agents who typically sell MYGAs have been selling more FIAs instead.
FIAs have a fixed account option, and the fixed rate is not that different from MYGAs, making it easy to transition over. Clients can still get the peace of mind of a guaranteed rate, but they can also put some of their money in other index crediting strategies, which have been seeing double-digit returns.
Check out the Teton Interest Credits handout:
It is definitely the year of Fixed Index Annuities (FIAs). Here at New Horizons, our FIAs account for nearly $9 million in production, year-to-date.
SILAC has been the main carrier for FIAs – we write more of their FIAs than anything else.
Their caps and participation rates haven't changed since May 19th, and clients who have had recent policy anniversaries are seeing double-digit returns on their indexed accounts.
Most agents choose to recommend the annual point-to-point on the S&P 500. I should also mention that we are seeing more money go into the Atlas and Ravenpack.
Also, clients who want to keep some of their money in a fixed account can do that. SILAC's 7-year FIA is offering 2.5% on the fixed account, which isn't that different from the MYGA rates available.
Most clients don't put much in the fixed account, but it's nice to have that option.
Also, the Denali FIA product from SILAC offers the income rider for no fee and is a home run for agents this year. In year 2, your client can start a lifetime income stream, and that's very attractive for retirees.
While SILAC is our most popular FIA, we also sell Athene, Equitrust, and American Equity to name a few. But SILAC is just so competitive; their rates are so good. They're going to write about $4.5 billion in annuities this year.
Top 3 Annuity Products In 2021
When we look at the annuity products and carriers agents are selling right now, 3 immediately jump out at me.
SILAC's Denali product is in 1st place by a long shot. SILAC has written $1.7 billion in that product so far this year, and that's a lot. It's just over half of their total production.
The Teton and Denali from SILAC are both strong products, but the Denali is a little more popular.
The Denali participation rates and caps are a little bit higher than the Teton, and the built-in lifetime income rider comes at no charge. That income rider adds flexibility so a person can utilize it down the road if they want.
The commission is the same on both products.
Another nice thing about SILAC is they have a consumer portal. Some people like accessing their account and keeping an eye on it. They can get customer forms and communicate with the company there, too. That's pretty unique.
In second place is the 2-year MYGA from SILAC, which is at 2.15%. It's the perfect product for people that want to wait and see what the market does. For those who don't want to go too far down the road and are waiting on better interest rates, that 2.15% is pretty good for only a 2-year commitment.
And third is Liberty Bankers Life's Single Premium Immediate Annuity (SPIA) that has gotten some attention. That's our go-to for SPIAs.
Another nice perk about LBL is that they will take inherited IRAs. Not many companies touch those anymore, but LBL will allow us to use them for inherited IRAs.
Their Elite series MYGA rates have also remained constant, and they offer a nice, competitive 3-year option. Their service is also outstanding, and service matters.
I want MYGA rates to go up, of course. With that said, as long as we're doing well in the FIA space and SILAC remains competitive, I'm happy.
As far as predicting anything, I just don't know. At some point, there will be some kind of correction, but we don't know when.
No matter what happens, we'll still have a product for everyone.
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