What's a Typical Expected Return for an Indexed Annuitiy?

[Norwayguy]

I agree...4-6% (before rider costs) is what I use as well.

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Agreed but it is worth noting that several carriers death benefits give you access to the GMWB over a shortened (5 years as an example) time frame.

I realize you knew the roll up was a rider feature and not Annuity value feature just wanted to make sure some of the people reading did not make that mistake.

 

[Tahoe Ray]

It depends but F&G new product has a "stacking" effect on its rider that is connected to the Dow Jones Real Estate Control Index...it is possible to get over 10% rollup per year ... just depending.

We've written a handful of these...I ran a quote with 100% allocated to that crediting strategy the other day.

On the "high" scenario, the GMWB rolled up at 16.99% annually. The banding is attractive on the "Pro" product as well.

I'm just not a fan of the carriers' ability to back test on illustrations with new strategies. I wouldn't advocate anyone putting all of their money in one strategy linked to real estate but even the opportunity to illustrate it as such can create abuses. Not to mention that they use today's caps and spreads...who's to say what the carrier might have done with a much higher VIX.

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I realize you knew the roll up was a rider feature and not Annuity value feature just wanted to make sure some of the people reading did not make that mistake.

Understood .

 

[Norwayguy]

We've written a handful of these...I ran a quote with 100% allocated to that crediting strategy the other day.

On the "high" scenario, the GMWB rolled up at 16.99% annually. The banding is attractive on the "Pro" product as well.

I'm just not a fan of the carriers' ability to back test on illustrations with new strategies. I wouldn't advocate anyone putting all of their money in one strategy linked to real estate but even the opportunity to illustrate it as such can create abuses. Not to mention that they use today's caps and spreads...who's to say what the carrier might have done with a much higher VIX.

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Understood .

Yeah backtesting ignore the fact that if the policy had been around back then it most likely would have been discontinued for a new policy series allowing the carrier to drift caps lower towards minimums and increase profit while the new policy seeker had the higher caps to compete with other carriers current products.

 

[Josh Landis]

I know it's a pretty broad question, but I was wondering what a typical expected return for an IA is over the life of its surrender period? Assume it's one of the better products available in the market at the time with regards to participation rate, caps, etc. Also assume you stay away from insurance companies with low ratings. Let's just use a 10-year surrender term product for example, and it won't be used for lifetime income; just accumulation. I imagine the return is pretty strongly correlated to the 10-year treasury, but I was wondering what a general ballpark would be.

Norwayguy and Tahoeray gave you good numbers. An FIA is likely to return between 4-6% annualized return over the life of the contract. Remember this is an annuity, there is no downside so you shouldn't expect huge returns, but you should expect a reasonable return of between 4-6%.