Home Page
Annuities
Annuities
Annuities
Annuities
Tax Free Retirement Plans
Tax Free Retirement Plans
Tax Free Retirement Plans
Tax Free Retirement Plans
Social Security Benefits
Social Security Benefits
Social Security Benefits
Social Security Benefits
Lifetime Income
Lifetime Income
Lifetime Income
Lifetime Income
Life Insurance
Life Insurance
Life Insurance
Life Insurance
Header
Annuities Tax Free Retirement Social Security Benefits Lifetime Income Life Insurance

Annuity Trends for 2017

2008 was a difficult year for many financial sectors, and the annuity business was no exception. With the possible implementation of the Department of Labor’s (DOL’s) fiduciary rule rapidly approaching, many industry experts are predicting that 2017 will prove to be just as challenging. Here’s what some are saying to expect, as reported in a LifeHealthPro article.

There’s no discussion about the future of annuities that doesn’t include the top regulation facing the industry, the DOL’s fiduciary rule. Traditional fixed annuities will fall under the 84-24 Exemption, but indexed and variable annuities will fall under the Best Interest Contract Exemption (BICE). In order to qualify for the BICE, those who sell indexed and variable annuities will have to work with a Financial Institution (FI). For those working with variable annuities, this is not a major concern considering banks and Broker/Dealers (B/Ds) already have Financial Institution status. Field Marketing Organizations (FMOs) and Brokerage General Agencies (BGAs), the primary distribution channels for indexed annuities, do not currently have FI status.

The Department of Labor recently released a document, their “Proposed Best Interest Contract Exemption for Insurance Intermediaries,” to provide guidance for FMOs and BGAs before the April implementation date. The document states that FMOs and BGAs will need the following to seek FI status:

  • Average annual fixed annuity sales of $1.5 billion for each of the preceding three years; (Less than a dozen of the 350 FMOs in operation today could meet this threshold.)
  • Insurance or cash reserves, or both, equal to 1% of their fixed annuity sales in the past three years, with maximum 5% deductible to cover violations of the exemption;

Interested parties have 30 days to comment on the document which was available on January 18. Many industry players feel that the DOL guidance was provided too late with just over two months before implementation. Only time will tell how the rule will impact the industry, and whether the rule will be delayed, modified, or remain in its current form.

Another concern for the annuity industry is low interest rates. Prior to the market’s collapse in 2008, the average fixed annuity rate was 3.10%. Today it’s just 2.71%. Indexed annuity caps have also dropped, from an average 6.86% to 4.03% over the same period. These historic lows have led to product innovation to continue to peak interest from consumers.

Over the last decade, most insurers have focused efforts on developing indexed annuities to combat the lower interest. However, with fixed annuities falling under the 84-24 Exemption of the DOL’s fiduciary rule, that is no longer the case. Industry experts predict we will see many more new traditional fixed annuity products in 2017, with a focus on Guaranteed Lifetime Withdrawal Benefits (GLWBs). Expect to see more fixed annuities with unique riders and ancillary benefits like return-of-premium provisions, bailouts, and index-linked kickers too.

Low interest rates have also led to a slew of new ways of calculating indexed gains on annuities. We likely won’t see a bunch of new crediting methods being created, manufacturers are expected to find more ingenuity with how they are presenting the rates on indexed annuities. GLWBs will also continue to evolve. An ongoing trend of fee-based indexed annuity product development will continue.

On the flip side of the coin, sales of fixed and indexed annuities will likely drop in 2017. While some expect president Trump to...

(Read More: http://www.annuityfyi.com/blog/2017/01/annuity-trends-2017/ - Written By Rachel Summit) 

Posted 12:21 PM  View Comments

Share |


No Comments


Post a Comment
Name
Required
E-Mail
Required (Not Displayed)
Comment
Required


All comments are moderated and stripped of HTML.
Submission Validation
Required
CAPTCHA
Change the CAPTCHA codeSpeak the CAPTCHA code
 
Enter the Validation Code from above.
NOTICE: This blog and website are made available by the publisher for educational and informational purposes only. It is not be used as a substitute for competent insurance, legal, or tax advice from a licensed professional in your state. By using this blog site you understand that there is no broker client relationship between you and the blog and website publisher.
Blog Archive


View Mobile Version
Home Page About Us Get A Quote Contact Us Life Insurance Insurance Website Builder