We have great rates on Multi-Year Guaranteed Fixed Annuities. A great interest rate on Multi-Year Guaranteed Fixed Annuities begins with knowing what a great rate is. There are a few ways to figure out if rates are truly great or not. One factor to look at is different products that offer fixed rates available on the market. With fixed guaranteed returns there is a limited number of product that offer guaranteed rates of return. The following is a list of the most common fixed investment options:
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| Fixed rate product | Interest rate ranking | Grows tax deffered | Tax Deffered Contributions | Long Term Gurantees Avalible | Tax Penalty before age 59 1/2 | Liquidity | Early surrender penalties | Term of gurantee availible | Source of Gurantee | Minamum amount | Maximum Amount |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Annuity | #1 | Always | Qualified=Yes | YES | Always | Medium | Yes | 1 year - 10 years | Financial Rating of the Insurance Company | $5,000 | Generally $2 Million |
| CD's | #2 | IRA=YES | Qualified=Yes | YES | Qualified=Yes | Medium | Yes | 1 months- 5 years | FDIC (Federal Deposit Insurance Corperation) | ~ $1000 | Set by Bank, Max FDIC $250,000 |
| U.S. Gov. EE Bonds | #3 or #4 | Usually Yes | Qualified=Yes | Yes | Qualified=Yes | Medium | Yes | 20 Years | U.S. Government | $25 | $10,000 per year |
| Savings Accounts | #3 or #4 | Never | Never | NO | NO | High | NO | Generally 1 month | FDIC (Federal Deposit Insurance Corperation) | $0 | Set by Bank, Max FDIC $250,000 |
| Checking Accounts | #5 | Never | Never | NO | NO | High | NO | Generally 1 month | FDIC (Federal Deposit Insurance Corperation) | $0 | Set by Bank, Max FDIC $250,000 |
Another way to know if you are getting a great rate or not it to look at the history of the rate being offered by that type of product. Fixed rate returns tend to follow Federal reserve rates, so we can get some indication by looking at the historical federal reserve rates. Hedge fund costs are another factor to take into consideration. Annuities protect their investors by “insuring” or hedging their investments against large market risks. Insurance companies control risk in several ways, including having conservative portfolios that meet institutional investment grade requirements. Insurance companies also have very high reserve requirements set by the insurance commissioners.
As a Licensed agent working in the Fixed Annuity market since 2007 I have seen rates vary from 1.5% to 3%. However, in the last two years the rates have been climbing steadily. Insurance companies have been trying to get out ahead of one another for at least the last year. Normally rate changes are announced at the beginning of the month however over the last two years many companies have made mid month adjustment to keep themselves competitive. Furthermore as an American I haven't see fixed rates over 5% since the early 80's! Now the Federal reserve rates are not anywhere near the rates at that time. I think we can all agree that the current rates are at historical highs. Could the rates increase from here and go even higher? Yes it's always possible, but I can also say that in the last month several Insurance companies have begun to pull back and lower their rates.
In this agent's objective opinion the current rates are indeed historically great!
