ANNUITY
The (Annuity)
sky isn’t falling
Part of what I do for my full-time hustle is to track every annuity,
its features, rates, and sales. AnnuitySpecs may look like a
simple website, but there is A LOT of work that goes into that
tool. Almost a dozen people are needed just to keep-up with all
the product information that goes into making this resource for
product intelligence.
Along those lines, it seems that things have been pretty crazy over the past couple of weeks,
in terms of the busy-ness within our offices. A quick glance at the recent rate changes in the
annuity industry validated my thoughts: 75 different rate reductions on hundreds of products,
just since March 1. Bananas.
Sheryl Moore, President & CEO
of Moore Market Intelligence, an
indexed product resource, as well as
the life and annuity market research
firm of Wink, Inc. She may be reached
at [email protected].
44
Perspectives
Q2 2020
Tough just got tougher
And things were already pretty tough when it comes to annuity pricing. The 10-year
Treasury, the primary benchmark for fixed and indexed annuity pricing, today stands at a
mere 0.763%. That is 1.067% lower than two months ago, when annuity rates were already
“unattractive,” and 3.177% lower than in 2009, before the Treasury note started to go south.
Compounding the issue is the volatility of the markets. This unpredictable and quickly-
changing stock market impacts the options costs on indexed annuities, as well as the pricing
on riders and charges on variable annuities. In other words, the tough just got tougher.
I cannot help but think of 2008/2009, when I anticipate how this all is going to affect
the products that are available in your toolboxes. Insurance companies are going to start
suspending sales of select products. Some smaller companies may even temporarily suspend
all sales for a short while. Premium bonuses on annuities will decline or disappear. Guaranteed
rollups on Guaranteed Lifetime Withdrawal Benefits will drop, and some riders will be
suspended. Commissions will likely be the last features to be negatively-impacted in insurers’
efforts to de-risk during this challenging pricing environment.