Fixed Equity Indexed Annuities Are the Bright Spot

LIMRA just put out a press release detailing the first quarter sales results for annuities.  While indexed annuities remained very strong, declines in both fixed and variable annuities led to an overall annuity sales decline in the first quarter of 2012.  Annuity sales were $54.8 billion during the first quarter, an 8% decrease from the first quarter of 2011.  Variable annuity sales had remained strong over the past two years, but went down 7% to $36.8 billion in the first quarter.  The popularity of guaranteed living benefit riders has companies working harder to manage the risk associated with these popular guarantees.  Ninety percent of people elect for the GLB rider when purchasing variable annuities.

Sales of fixed equity indexed annuities increased by 14% in the first quarter.  This is the third quarter in a row that indexed annuities have outperformed traditional fixed annuities.  Fixed annuity sales were affected by low interest rates and were down 10% in the first quarter, at $18 billion.  The GLWB rider has remained popular with indexed annuities; 2/3 of purchasers choose this benefit when it is an option at purchase.  The benefits of principal protection along with the potential to grow their wealth in positive markets has been increasing the demand for fixed equity indexed annuities for awhile.  You can find the top 20 annuity companies in each category through LIMRA’s website, if interested.

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