Interest rates represent the cost of capital or what you pay to borrow money. A detailed definition of interest rates is beyond the scope of this glossary. What is important to remember is that interest rates are critical components of virtually every financial product you consume. This is especially true with annuities because, in general, insurance companies manufacture annuity products through a combination of bonds and derivatives. As a result, interest rates are the raw material of all annuity types.
Submitted by tom on
A fairly prominent recent article in the Wall Street Journal discusses the recent attention paid to immediate annuities in the wake of the Obama Administration's "middle class task force" initiatives.
There are some very good scenarios describing the payouts and comparative merits of immediate annuities.
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 year mortgage rates are now less than 5 percent.
The financial crisis has led to an upsurge in the sale of fixed annuities. Fed-up with...
