How Low Can We Go?
March 24, 2020 by Colleen McGarry
In December 2008, a few months after the largest government bailout of an insurance company in U.S. history, the Fed dropped the interest rate to the all-time low: 0.25%. Since then, the U.S. has maintained an interest rate of 2.5% or lower, affecting the mindset of Americans looking to invest in retirement income. Annuity products often rely on interest rates as a means for determining pricing, potentially affecting the ultimate payout that annuitants receive. How is the industry dealing with this ongoing low interest rate environment?
Competitive intelligence firm Corporate Insight (CI) tracks the industry on an ongoing basis to understand changes firms make throughout their digital experiences. Since 2006, CI’s Annuity Monitor has tracked the online strategies including the product positioning and marketing tactics of leading annuity issuers. Within the last five years of the low interest rate environment, firms have focused heavily on developing new fixed indexed annuities and variable annuities, catering toward individuals looking for growth and protection in retirement. CI has also seen a major industry push leading to consistency across firm marketing and annuity positioning, framing the products as guaranteed lifetime income and urging retirees and near retirees to purchase them to fill gaps in their current savings.