We would love to hear from you. Click on the ‘Contact Us’ link to the right and choose your favorite way to reach-out!

wscdsdc

media/speaking contact

Jamie Johnson

business contact

Victoria Peterson

Contact Us

855.ask.wink

Close [x]
pattern

Industry News

Categories

  • Industry Articles (21,155)
  • Industry Conferences (2)
  • Industry Job Openings (35)
  • Moore on the Market (414)
  • Negative Media (144)
  • Positive Media (73)
  • Sheryl's Articles (800)
  • Wink's Articles (353)
  • Wink's Inside Story (274)
  • Wink's Press Releases (123)
  • Blog Archives

  • March 2024
  • February 2024
  • January 2024
  • December 2023
  • November 2023
  • October 2023
  • September 2023
  • August 2023
  • July 2023
  • June 2023
  • May 2023
  • April 2023
  • March 2023
  • February 2023
  • January 2023
  • December 2022
  • November 2022
  • October 2022
  • September 2022
  • August 2022
  • July 2022
  • June 2022
  • May 2022
  • April 2022
  • March 2022
  • February 2022
  • January 2022
  • December 2021
  • November 2021
  • October 2021
  • September 2021
  • August 2021
  • July 2021
  • June 2021
  • May 2021
  • April 2021
  • March 2021
  • February 2021
  • January 2021
  • December 2020
  • November 2020
  • October 2020
  • September 2020
  • August 2020
  • July 2020
  • June 2020
  • May 2020
  • April 2020
  • March 2020
  • February 2020
  • January 2020
  • December 2019
  • November 2019
  • October 2019
  • September 2019
  • August 2019
  • July 2019
  • June 2019
  • May 2019
  • April 2019
  • March 2019
  • February 2019
  • January 2019
  • December 2018
  • November 2018
  • October 2018
  • September 2018
  • August 2018
  • July 2018
  • June 2018
  • May 2018
  • April 2018
  • March 2018
  • February 2018
  • January 2018
  • December 2017
  • November 2017
  • October 2017
  • September 2017
  • August 2017
  • July 2017
  • June 2017
  • May 2017
  • April 2017
  • March 2017
  • February 2017
  • January 2017
  • December 2016
  • November 2016
  • October 2016
  • September 2016
  • August 2016
  • July 2016
  • June 2016
  • May 2016
  • April 2016
  • March 2016
  • February 2016
  • January 2016
  • December 2015
  • November 2015
  • October 2015
  • September 2015
  • August 2015
  • July 2015
  • June 2015
  • May 2015
  • April 2015
  • March 2015
  • February 2015
  • January 2015
  • December 2014
  • November 2014
  • October 2014
  • September 2014
  • August 2014
  • July 2014
  • June 2014
  • May 2014
  • April 2014
  • March 2014
  • February 2014
  • January 2014
  • December 2013
  • November 2013
  • October 2013
  • September 2013
  • August 2013
  • July 2013
  • June 2013
  • May 2013
  • April 2013
  • March 2013
  • February 2013
  • January 2013
  • December 2012
  • November 2012
  • October 2012
  • September 2012
  • August 2012
  • July 2012
  • June 2012
  • May 2012
  • April 2012
  • March 2012
  • February 2012
  • January 2012
  • December 2011
  • November 2011
  • October 2011
  • September 2011
  • August 2011
  • July 2011
  • June 2011
  • May 2011
  • April 2011
  • March 2011
  • February 2011
  • January 2011
  • December 2010
  • November 2010
  • October 2010
  • September 2010
  • August 2010
  • July 2010
  • June 2010
  • May 2010
  • April 2010
  • March 2010
  • February 2010
  • January 2010
  • December 2009
  • November 2009
  • October 2009
  • August 2009
  • June 2009
  • May 2009
  • April 2009
  • March 2009
  • November 2008
  • September 2008
  • May 2008
  • February 2008
  • August 2006
  • Fixed Index Annuities and Rising Interest Rates: How They Can Get Along

    March 10, 2012 by Kenneth L. Brown

    Brown, Kenneth L

    Much as New Year’s Day prompts Americans to commit to achieving healthier lifestyles, the federal tax deadline is a perennial call to action to get their financial lives in order. As a consequence, many producers see an increase in client interest to get serious about retirement planning and to bring order to what can be a hodge-podge of investments.

    One common strategy for giving clients more control over their investments is a rollover of existing 401(k) and other assets into an IRA. This is a positive step, in that it generally allows these clients to enjoy greater investment options and lower expenses. Producers are increasingly becoming aware of a complementary strategy that can help these clients solidify their plans for retirement income, as well — the fixed index annuity.

    This might seem hard to believe, given the historically low interest rates we saw in 2011. Despite a slight rise in the three-month LIBOR rate toward the end of the year, the rate spent most of the year in the sub 0.4% range. Such rates have made many interest rate sensitive options, from money market accounts to certificates of deposit (CDs), much less attractive. Yet, as 2011 came to a close, LIMRA proclaimed that fixed index annuities were on track to enjoy a record-setting year, with 2011 third quarter sales matching the record level of $8.7 billion set in the third quarter of 2010.

    The fact is, regardless of the economic climate, fixed index annuities provide a very likeable combination — upside potential and flexibility in allocating between fixed and indexed strategies — for clients seeking to build retirement income. Unlike traditional fixed annuities, a fixed index annuity provides owners with interest-crediting potential that’s connected to the performance of one or more benchmarks or market indices. The owner has the option of putting all or part of the annuity’s value in the index, with the fixed-interest component applying to anything remaining. The owner gets a credit if the index rises, yet enjoys principal protection if the index goes down. The owner can always reallocate between the fixed and index components of the product on the contract anniversary date.

    Where will rates go?

    Despite these core attractions, fixed index annuities can still represent a sales challenge for producers, due to the prospect of future rising interest rates. When interest rates have been this low for this long, producers and clients alike worry that rates will rise in the near future, which can make any range of interest rate-linked instruments seem less attractive.

    Insurers understand this challenge and recently have launched new refinements to the fixed index annuity product to mitigate the effects that rising interest rates could have on performance. Several carriers have introduced interest rate-based crediting strategies that use a point on a published “swap curve” as the benchmark rate. ING recently launched a new interest-crediting strategy that bases credit on an increase, if any, in the three-month LIBOR. The strategy, available on some of the company’s fixed index annuities, credits interest to the consumer if the three-month LIBOR rises from one annuity anniversary to the next. Here’s how it works:

    * If interest rates rise while a client’s funds are allocated to the interest rate benchmark strategy, he or she gets a credit, no matter how the equity markets might perform in a contract year.

    * Should the benchmark rate drop during a contract year, the owner gets no credit, but his or her principal is protected.

    * The annuity owner can mix things up, using the interest rate benchmark strategy in some years and not in others.

    * Working with the producer, the owner can take advantage of the flexibility of the product to create a diversification strategy, varying the amounts in the product’s guaranteed rate, equity index and interest rate benchmark options.

    Since the interest rate floor resets on every contract anniversary date, just as annuity index floors do, the client has the potential for new credits based on interest rate increases, regardless of the previous year’s ups or downs.

    Getting off the dime

    Many Americans are stuck between the perceived perils of stock market volatility and the fear of locking into current interest rates that may prove unsatisfactory if rates rise down the road. Unfortunately, for many, the answer has been to maintain their liquidity by remaining invested in cash. While the low interest they receive is itself a drawback, the bigger impact is harder to see: It’s the missed opportunity to pursue growth, which they must forgo in the interest of greater short-term security.

    Producers must be prepared to help their clients make reasonable assessments of the risks inherent in “sitting out the turbulence.” By alerting clients to new options such as the interest rate benchmark option in a fixed index annuity, producers will be helping these clients take confident steps toward a more secure retirement.

    Kenneth L. Brown is the vice president of Sales Development & Strategic Support for ING U.S. Insurance’s annuity and asset sales business, overseeing marketing, product development, regional wholesaling, sales training and development, and wholesale operations for the company’s annuity business.

    Annuities are products of the insurance industry. They are not deposits in, obligations of, or guaranteed by a bank or any other financial institution and are not insured by the FDIC. Fixed index annuities are insurance contracts that, depending on the contract, may offer a guaranteed annual interest rate and earnings potential that is linked to participation in the growth, if any, of an index or benchmark.

    Copyright:

    (c) 2012 Life Insurance Selling

    Source:

    Proquest LLC

    Wordcount:

    920

    Originally Posted at InsuranceNewsNet on March 2, 2012 by Kenneth L. Brown.

    Categories: Industry Articles
    currency