The recent severe weather in the Northeast notwithstanding, sometimes a “storm” can be a positive force. Take, for instance, the forces that have converged to propel fixed indexed annuities (FIAs) to the top of the annuity world. While sales of variable annuities and fixed-rate annuities have slumped in recent quarters, FIAs have increased in sales volume.
The broad fixed annuity category‑which includes fixed indexed annuities‑fell 12.8 percent between the third quarter of this year and Q3 2011, going from $19 billion to $16.6 billion, reports Beacon Research. Meanwhile, the FIA subset gained‑albeit slightly‑during over that same period, rising from $8.69 billion to $8.74 billion.
Yet, a third-quarter report from AnnuitySpecs.com, which compiles sales statistics on fixed annuities, found that guaranteed lifetime withdrawal benefit (GLWB) elections had dropped in the third quarter. The report points to increased rider charges and reductions in roll-ups as two reasons for the decline; it also indicates that FIA providers are seeking ways to manage those GLWB options in a depressed rate environment.
In the same vein, some variable annuity providers are either offering buyouts to escape those clauses or constructing their policies without GLWBs.