March 2010
Take Notice of The Standard’s Renewal Rates
By Mark MacGillivray, Regional Sales Director
Recently one of our brokers called and said, “Mark, I just received my first renewal statement for your IGA. I had to call you because I was very impressed to see that my client’s renewal cap actually went up 2%!”
These types of calls are fun to receive from my perspective as a Regional Sales Director with The Standard. Over my career, I’ve worked for two of the largest fixed-annuity carriers in the country. Given the way most companies treat renewal rates, I didn’t receive many calls like the one above.
Are you in the habit of looking beyond the first-year rate on renewable annuities? It could pay off for your clients. Let’s look at two key points regarding renewal rates: accessibility and history for index annuity renewals and all the other non-MYGA annuities we issue.
- Along with detailed information on each annuity we offer, our website lets you easily access the new money and renewal rates on our most popular products. Many major competitors’ sites don’t offer online access to renewal histories and the information is hard to get. In some cases, your wholesaler can obtain it for you, but usually it takes a strong effort on your part.
- Our renewal rates are historically very strong. Of course discussing renewal rates can be tricky; each company has a slightly different way to manage assets and invest for annuities. More importantly, each company is looking for a different return on investment (ROI) on an annuity line. (Jim Teague, who heads our Annuity operation, recently wrote about how renewal rates are set. Just email us for a copy if you missed it.)
The key for you as a broker is not just the first-year rate, but what will happen after year one to your client’s interest rate. Obviously, using a MYGA will take the renewal concern out of play until the end of the initial rate guarantee period. However annuities that are subject to renewal after the first year still represent the largest share of fixed deferred annuities sold in the U.S. At The Standard, we show multiple years where renewal rates have actually gone up — and not just on our index annuity. That can make a huge difference for your clients — and your sales.
So, whenever you’re looking for a deferred annuity, take the time to look past the first year rate. Try to obtain renewal rate history information for the product. And remember, you can always trust The Standard to offer a solid first year rate, strong renewals and to make it easy for you to get all the information you need to make the right decision.