Market volatility and rising interest rates helped boost the sale of annuity products over the last 18 months, according to LIMRA. CI’s 2023 Annuity Monitor Mid-Year Review Report supports the idea of an annuity friendly marketplace, identifying several new and recently updated products. Many firms advertised their product launches and enhancements as helping to better protect account owners from either market volatility, fluctuations or downturns.
Fixed Annuities
Current market conditions—rising interest rates, spikes in market volatility, and continuing aftershocks from COVID supply chain disruptions and the war in Ukraine—have made fixed annuities especially attractive to investors. Insurers offered competitive rates with the guarantee of a safe harbor for investors’ savings.
TIAA, for example, increased the interest rates on its TIAA Traditional fixed annuity product by 13% in March in response to the Federal Reserve’s rate hikes. The firm advertised this percentage as historically high in a welcome message on their public site homepage. TIAA also kept their clients updated on the fed hike rates. In November 2022, a new Fed Update tile on the firm’s public site homepage notified users that the Fed will continue to hike rates until inflation improves. Then in April, TIAA published a message to its homepage about not letting shaky markets disrupt long-term goals, linking to its existing public site Market Volatility page where the firm promoted its TIAA Traditional product.
“It can be reassuring to know that your retirement savings are protected and guaranteed to increase every single day — even in the choppiest markets.”
– TIAA
Meanwhile, New York Life launched a fixed deferred annuity product, New York Life Clear Income Advantage Fixed-Annuity-FP Series, in March. The firm emphasized the product’s ability to protect clients from market volatility, as the account owner’s account value and guaranteed income is not tied to market performance. Users can access more information about the product on the firm’s new public site Clear Income Advantage page.
Registered Index-Linked Annuities
Firms also released and updated their registered index-linked annuity (RILA) products to acknowledge market volatility. In May, F&G Annuities & Life announced its plan to launch a RILA in response to rising interest rates and its strong sales of non-variable indexed annuities. The firm claims that the recent volatility in the market has helped its sales.
Other firms, such as Allianz Life and Equitable, opted to enhance their existing RILA products to help stronger protect clients against market volatility:
- Allianz Life renamed its index variable annuity line of business to registered index-linked annuities and updated its products and product pages to reflect the change. The firm also enhanced its Allianz Index Advantage+ RILA product suite, as announced in a press release, adding a Lock and Get Back In option. This feature now allows investors to reallocate their locked Index Option Values, protecting them from potential market downturns as well as offering two chances to participate in potential upside market returns.
- Similarly, Equitable launched two new product features that are designed to help investors face the challenging market, partially protecting them against market volatility as well as allowing them to capture upside market potential to a cap:
- The Loss Limiter feature is designed to ensure that clients will not lose over 5% to 10% of their investments because of index performance in the feature’s segment at maturity. This feature provides downside protection built in with as a buffer against up to -10% loss as well as a protection guarantee of 90% or 95%, regardless of how far the equity index chosen drops.
- The Dual StepUp feature is designed to guarantee clients a positive rate of return that is equal to the performance cap rate if, at the completion of the one-year period, the selected index return is either greater than or equal to the buffer selected.
Additionally, TruStage announced enhancements to its ZoneChoice RILA, offering more flexibility and diversification. The enhancements include the addition of the Dimensional U.S. Small Cap Value Systematic Index that allows clients to pursue higher expected returns, a transfer feature for investment control, and one-year buffer allocation options for balancing protection and growth potential.
Learn more about our subscription annuity research and the other five key findings for firms in our 2023 Annuity Mid-Year Review report. And see more insights from around the financial services and healthcare world.