Annuity Trends - Interest Rate Trends

Insurance companies typically invest 65% to 70% of their immediate annuity premiums in fixed income securities, with the majority in corporate bonds. Moody's AAA Corporate Bond Index is a good proxy for studying the returns insurance companies earn on these premiums. Recently, interest rates for the Treasury's 10-Year Note have been hovering near 50-year lows. Corporate bond interest rates, however, have remained above their 2003-2005 levels (see Charts 1 and 2). If you study Charts 3 to 14, you can readily see that immediate annuities payouts today are still quite attractive and remain above their comparable levels from 2003-2005. (Editor: Hersh Stern on 7-10-2009)

To receive an instant immediate annuity estimate use the calculator on the home page.