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.
The biggest update for this quarter is the incredible growth of fixed index annuities here at New Horizons.
We started to see it last year, but FIAs are now more popular than MYGAs. In this quarterly update, we'll explain why that is, including which products are really "flying off the shelf."
The Growth of Fixed Index Annuities (FIAs)
We're selling more FIAs than any other type of annuity – there's no doubt about that. There's a chance for better growth and bigger returns on your money even though it's somewhat tied to the stock market.
In other words, your clients are able to participate in slightly bigger gains (when compared to a regular fixed annuity) without taking on any risk. The key phrase with FIAs is "zero is your hero." Your client won't lose any of their principal.
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.
Here's one example we recently wrote about: Fixed Index Annuity Review: A Real Client's Annual Statement. Spoiler: combined, this client earned a total of 15.26% over the last 12 months.
MYGAs Aren't Too "Hot" Right Now
MYGA rates have really leveled off, with average rates sitting right under 3% for a 5-year term. They haven't been as attractive as they usually are, and that's likely why FIAs are really taking off right now.
With that said, there's always bank money out there, and the banks just are not giving anything. So we're still seeing a lot of bank money coming in for MYGAs, but the fixed index arena has really blossomed.
We see a lot of people with retirement funds trying to find a home for their money, and a FIA offers potential for more growth than our MYGA products.
Top Annuity Carriers
SILAC has been leading the way with the Denali product. It has an income rider already built-in, and it doesn't charge the customer anything – there's no fee on it. That's very rare.
The Denali is seeing more activity for us than the Teton product, and that's true for us as well as SILAC. They recently reported $508 million with Denali and $408 with Teton (both FIA products).
MYGAs, on the other hand, were at $145 million. That gives you an idea of how the numbers are trending.
The Teton and Denali are both strong products from SILAC, 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.
Right now, the MYGA space is really shining with the shorter-term annuity products. Clients who don't want their money tied up in a typical 7 or 10-year FIA contract can get excited about a 1 or 2-year annuity. The interest beats the bank, and their money isn't locked up.
The window annuity from KSKJ is leading the way at 1.5% for 1 year. ELCO is coming in at 1.25% for 1 year.
Also, some people like the 2-year with SILAC, which is at 2.15%.
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.)
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. SILAC, 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.
There's always a carrier who comes in and gives a little better rate than everyone else for a little bit. I see that happening in the next quarter.
My prediction is that a MYGA carrier will come in and have a more competitive rate than what we're seeing right now. It'll be a short-lived deal, but we're certainly here to take advantage of it to help agents and their clients.
Whether our existing rates go up or down, we really don't know. No one knows! But I'll be here to report back to you and keep you updated.
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Check out our complete guide here: The Ultimate Guide to Selling Annuities In the Senior Market