Annuities and surrender activity subject of LIMRA/SOA study
April 2, 2025 by Susan Rupe
The presence of a surrender charge has an impact on when the bulk of surrender activity occurs in the fixed-rate deferred annuity space.
That is among the results of a study conducted by LIMRA and the Society of Actuaries, which will be presented during the 2025 Life and Annuity Conference, hosted by LIMRA, LOMA, American Council of Life Insurers and the Society of Actuaries.
Key points of the study include the impact of surrender charges on surrender rates, the significance of guaranteed lifetime withdrawal benefit riders, and how these riders affect policyholder behavior and contract longevity.
Wink’s Moore on the Market: “Maureen Shaughnessy, LIMRA senior actuary, described some of the study findings. One key finding is that during the surrender charge period, surrender rates are low. Then, in the year the surrender charge expires, “there’s this huge shock surrender in the year that it expires,” she said. “And then thereafter, surrenders remain elevated.”
You don’t say!
Don’t we all know by now that most carriers drop their credited rates/caps on annuities business, once the surrender charge expires? Of course the surrenders are going to increase then. -sjm
