Bucking the Herd, One Annuity Purveyor is Temporarily Offering Extremely Generous Rates on a Seven-Year MYGA.
In highly stressed times like these, it’s not unusual for companies to do things they seldom do. For example, most people are driving much less these days. So auto insurance companies are responding by giving customers partial policy rebates or credits on renewed policies.
Some annuity purveyors are starting to do the same sort of thing.
Sammons Financial Group, a financial services company that owns Midland National and North American which offer variety of financial and retirement products through multiple distribution channels, is temporarily offering a highly attractive deal on plain vanilla fixed annuities – specifically, multi-year guaranteed annuities (MYGAs).
Currently, it’s significantly beating the competition on its seven-year MYGA, the LiveWell Guarantee Annuity. By contrast, most of the time it has been less competitive, not more competitive, than other annuity purveyors. Popular belief is that this is in large part to their very high safety ratings, e.g. insurance companies with high safety don’t usually offer the highest ratings. Specifically, the A.M. Best A+ rated company is currently offering a guaranteed rate of up to 3.55%.for all seven years on its MYGA. In comparison, the next most competitive plans are offering no more than 3.2% on this product and sometimes only 3% and those companies are rated B++ by A.M. Best.
To get this rate, investors have to invest at least $250,000. But a $100,000 investment still fetches an attractive 3.5% annual rate. The rate for investments under $100,000 is 3.1%. The minimum investment is $10,000.
A $100,000 investment – typical for many annuity buyers – usually generates roughly $3,100 in income annually. The same investment in LiveWell would generate $3,500 annually. Because interest is compounded, the differential would grow over time. After the first year, LiveWell investors can withdraw 5%of their investment annually without penalty.
“This is by far the best rate you can get on a seven-year MYGA with an A+ Superior rating. The next most competitive rate is 3.2% with zero liquidity and a B++ rated carrier. The Sammons LiveWell is 3.50% for most of our investors and offers 5% liquidity per year, which is more than most need. ” says one annuity professional familiar with the product.
Some perspective is in order. Last year there were a few opportunities to receive 4.0%, for 5 to 7 years, but those companies were not A+ rated. In addition that was before rates started dropping significantly and prior to the eruption of the new coronavirus. Note: The 7-year U.S. Treasury rate was at +/-2.50% during these higher offering periods of 2019, compared to the April 1st rate of .51% (that’s an incredible 80% drop in the comparable Treasury rate). That said, annuity interest rates have since been dropping across the board, in tandem with unprecedented rate cuts by the Federal Reserve Board, dropping short-term interest rate to zero or just a smidgeon above. The appeal of the LiveWell annuity is obvious given how low interest rates in general now are. Plus expectations are widespread that they are virtually certain to remain deep in the cellar for the foreseeable future.
“By comparison, seven-year certificate of deposit rates today are 1.8% or less — typically far less. This is why we firmly believe that this 3.50% LiveWell opportunity will not be available for long and fits squarely into the category of, “Not too good to be true – just too good to last”.
In 2019 the inflation rate averaged 1.81% (source InflationData.com) and in January and February it was moving towards 2.50%, but that was pre-coronavirus and we are now likely to see inflation drop to near zero in the coming months, once again emphasizing the rare opportunity to earn 3.50% for 7-years with an A+ rated carrier.
The roots of Sammons Financial date back to 1938. Member companies of the holding company include Midland National Life Insurance Co., North American Company for Life and Health Insurance and Sammons Institutional Group.
Sammons Financial initiated this offer on April 7. Annuity watchers predict it will last only two to four weeks from this point.
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