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Annuities keep breaking records in 2022

Annuities keep setting new records. In LIMRA’s “U.S. Individual Annuity Sales Survey,” these products showed increasing sales for the second consecutive quarter, with $79.6 billion in sales during the third quarter, a 27% increase over the previous year.

Annuities have become more popular over the last year as investors have fled the sinking stock market due to rising interest rates and volatility. Annuities have become a more appealing choice since they provide downside protection as well as guaranteed returns.

According to LIMRA, which revealed its latest figures this week, annuity sales continue to exceed prior records. Todd Giesing, assistant VP of LIMRA Annuity Research, said that increasing interest rates and sliding equity prices create a perfect storm for annuities.

To observe this combo is an unusual event, he remarked. People want safety and protection.

When the equity markets get volatile, investors typically resort to bonds. However, since the Federal Reserve began drastically raising interest rates this year, bonds are no longer as appealing as they once were. That has enabled annuities, particularly fixed-rate deferred annuities, to thrive.

Fixed-rate deferred annuities sold $29.8 billion in the third quarter, a 159% increase over the same period the previous year. According to LIMRA, this is the biggest number of sales for these funds ever. Fixed-rate deferred annuity sales hit $74.4 billion in the first nine months of 2022, a 77% increase over the previous year.

Giesing predicted that sales of fixed-rate deferred annuities would exceed $100 billion by the end of the year, breaking the previous record of $80.8 billion established in 2002.

Fixed-indexed annuities also set a new high, with $21.4 billion in sales in the third quarter, up 25% from the previous year. The previous high was reached in the second quarter of 2019 when the products sold for $20 billion. Overall fixed-indexed annuity sales increased by 22% to $57.4 billion.

Fixed-indexed annuities have been the most successful because they can deliver two benefits, according to Giesing. The first is principal protection, which means an investor won’t lose their investment in the product. Second, should the stock markets recover, they offer attractive cap rates in the low double digits.

Other forms of annuities have also continued to thrive, including registered index-linked annuities (commonly known as RILAs), which generated $10.5 billion in sales in the third quarter, a 13% rise. The funds got off to a fast start this year, with $30.9 billion in sales in the first nine months, 9% more than the same period last year.

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Bio:
Todd Carmack grew up in Dubuque, Iowa, where he learned the concepts of hard work and the value of a dollar. Todd spent years in Boy Scouts and achieved the honor of Eagle Scout. Todd graduated from Iowa State University, moved to Chicago, spent a few years managing restaurants, and started working in financial services and insurance, helping families prepare for the high cost of college for their children. After spending years in the insurance industry, Todd moved to Arizona and started working with Federal Employees, offing education and options on their benefits. Becoming a Financial Advisor / Fiduciary can help people properly plan for the future. Todd also enjoys cooking and traveling in his free time.

Disclosure:
Investment advisory services are offered through BWM Advisory, LLC (BWM). BWM is registered as an Investment Advisor located in Scottsdale, Arizona, and only conducts business in states where it is properly licensed, notice has been filed, or is excluded from notice filing requirements. This information is not a complete analysis of the topic(s) discussed, is general in nature, and is not personalized investment advice. Nothing in this article is intended to be investment advice. There are risks involved with investing which may include (but are not limited to) market fluctuations and possible loss of principal value. Carefully consider the risks and possible consequences involved prior to making any investment decision. You should consult a professional tax or investment advisor regarding tax and investment implications before taking any investment actions or implementing any investment strategies.

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Todd Carmack

Todd Carmack grew up in Dubuque, Iowa, where he learned the concepts of hard work and the value of a dollar. Todd spent years in Boy Scouts and achieved the honor of Eagle Scout. Todd graduated from Iowa State University, moved to Chicago, spent a few years managing restaurants, and started working in financial services and insurance, helping families prepare for the high cost of college for their children. After spending years in the insurance industry, Todd moved to Arizona and started working with Federal Employees, offing education and options on their benefits. Becoming a Financial Advisor / Fiduciary can help people properly plan for the future. Todd also enjoys cooking and traveling in his free time.

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