Overall annuity sales jumped an astonishing 29% in the third quarter from a year earlier and hit a record, trade association LIMRA reports.
As stocks, bonds and other investments have tanked, ordinary investors have flooded into higher-fee annuity products in the quest for investments with more “safety” or “protection.”
Overall annuity sales jumped an astonishing 29% in the third quarter from a year earlier, hitting a record $81 billion, LIMRA reports. So far this year sales are up 17% to $224 billion. But insurance companies do not sell these products below cost, or out of the kindness of their hearts, and life insurance industry costs are rarely trivial. One way or another, customers pay, and they often end up paying a lot. The cost comes in the form of lower returns.
Yes, annuities are paying much higher interest rates than they were a year ago. But that’s because bond yields are up. You can always just buy the bonds.
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