Fixed Annuity

A fixed annuity provides a guaranteed rate of interest during the accumulation period and a guaranteed (“fixed”) amount of income when the contract is annuitized. With a fixed annuity, the insurance company is responsible for investing the premium payments and therefore assumes investment risk. The insurance company is obligated to provide guaranteed annuity payments regardless of whether their investments have generated an adequate rate of return. With a fixed annuity: 1) the money can go in as a single premium payment or a series of payments; 2) the money is invested at a fixed or guaranteed rate, and; 3) payments are at a fixed rate and can begin immediately or at some future date.

Chairman Bernanke's Annuities

It is reported that Federal Reserve Chairman Ben Bernanke owns two annuities.

One is a variable annuity and the other is a fixed annuity.  Each annuity is worth between $250,000 and $500,000.

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New Rules for Fixed Annuity Suitability

The National Association of Insurance Commissioners (NAIC) has adopted an amendment that will affect the processes involved in determining the suitability of fixed annuity sales. Much of the supervisory responsibility for fixed annuity suitability will be shifted towards the insurance company . Broker -dealers will likely receive much of their guidelines, materials and recommendations from insurance companies. The result is an increase in compliance burden which will likely have the greatest...

Individual Annuity Sales Decline in 2009

LIMRA reports that total individual annuity sales declined by 11 percent in 2009. Sales of all types of individual annuity products in the United States totaled $234.9 billion in 2009. Variable annuity sales totaled $127 billion, a decrease of 18 percent for the year. Indexed annuity sales totaled $29.4 billion, an increase of 9 percent relative to 2008.
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The Dangers of Buying an Annuity When Interest Rates are Low

Interest rates are the raw material used in manufacturing annuities.  Rates are currently very low--the 10 year treasury note is hovering around 3.4 percent and 30...

Annuity Sales Down 17% in Third Quarter to $181.6 Billion

Sales of individual annuities in the United States decreased for the third straight quarter. Total individual annuity sales for the first nine months of 2009 were $181.6 billion. Fixed annuity sales continued to decline at a rate of 19% compared to the same period the previous year. Variable annuity sales were hurt by a significant downturn in Section 1035 exchanges as carriers have been scaling-back on product features while increasing prices. Source: Wall Street Journal Full Story
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