28 February 2012
Low Interest Rate Environments and Their Affects on Fixed Annuity Rates
The current economic climate is influencing how insurance companies make decisions regarding their interest rates. No one (individually, corporately, or governmentally) is immune to the low interest rate environment and the challenges it poses. Insurance companies that offer annuity products make long-term guarantees and promises to their customers and therefore are big buyers in the fixed income industries.
The recent environment of low interest rates has proven challenging to these insurance companies. When long-term income is bought into by insurance companies at low rates, they are forced to offer lower rates to their clients in return. This is the reason that many have seen interest rates drop in annuity products this past year.
Regardless of the lower rates, however, annuities are a great way to preserve and protect your assets. Since they guarantee your original investment amount, there is no fear of losing capital. While they don’t have the potential larger returns that stocks do, they can offer a rare investment peace-of-mind.
Please feel free to call me at (952) 837-3235 if you want to learn more about annuities and how they can help you with your retirement planning.