Where are annuity contracts’ interest rates?

[Peter Gulia]

For an insurance company’s fixed annuity contract (or fixed-interest element under an otherwise variable annuity contract), what is a typical credited interest rate?

 

And for such a contract issued recently, what is a contract-guaranteed rate?

[david rigby]

Peter, sometimes I look here when needing a rough estimate:  https://www.dietrichannuity.com/, but this represents net settlement rates, usually for events such as DB plan close-outs.  Is that relevant to your Q?

[Peter Gulia]

Thank you for helping.  But no, I'm asking about interest crediting rates (and a guaranteed rate) on an annuity contract that is still in accumulation mode.

 

[Patricia Neal Jensen]

Having worked for such annuity companies for years, my response would be that you must ask the ins. co.  This information can change daily for new quotes and there may be change options even in an existing contract.  If this is an existing contract, you can begin by looking at the contract summary sheet issued with the contract, but, again, you will probably have to contact the insurance company... or have the contractholder do it, if that is not you.   Many ins. co's today will have a very low contract base guaranteed rate.  It may be the state law minimum in the state of issuance.  Many of these companies were badly burned during the wild inflation rates of the Carter years.  (I sold one at a 17% guaranteed rate!  That was the highest one I ever sold.) They are very cautious about extended guarantees unless they can "lay off" the investment return in  commensurate "matching" investments right away.  (see Executive Life Insolvency to find out what can happen if "matching" is not used or is improperly used.)

[Peter Gulia]

Patricia Neal Jensen, thank you for the information.

 

Recently, I saw an accumulation annuity contract (and one that no one ever will take an annuity from) with a guaranteed rate of 1%.  I was surprised the guaranteed rate was that high.

 

Having worked through the insolvencies of Baldwin United, Executive Life, Mutual Benefit Life, Confederation Life, and others, I’ve seen the wreckage that can result from incautious promises.

 

Even at 0% interest, the insurer still is taking on risk.

 

[BobbyV]

Our group fixed annuity has a minimum guaranteed rate of 1.0% and is currently crediting 1.95%