Jun 14, 2023
In this episode, The Annuity Man discussed:
How do life insurance companies price annuities?
Nobody knows where interest rates are going
Annuities are commodity products
MYGAs, the annuity industry’s version of a CD, has become very popular because the guarantees contractually are very attractive if your time horizon is more than three years. You’d be better off buying CDs and treasuries for less than three years.
Nobody knows where the interest rates are going, but right now, the interest rates are very fair and the highest that we’ve seen for a long time. The annuity industry does watch the interest rates but does not price their annuities primarily on it.
Annuities are commodity products, meaning that you have to shop all carriers for the highest contractual guarantee. Also, the guarantees change based on the capacity and the money coming into the carrier.
"Knowing that the bell doesn't ring at the top or the bottom, knowing that you can't time it. Are those guarantees… fair? Do they help you reach your goals? That's a yes or no answer." — Stan The Annuity Man.
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