Will Annuity Rates Increase in 2022?
One of the most common questions we get is, “Will annuity rates rise in 2022”? Finally, the answer is “Yes, annuity rates are going to increase in 2022, and soon!” Eighteen annuity companies increased their annuity rates effective March 1, 2022. We have been in a decreasing interest rate environment for a long time but annuity rates are finally trending upwards.
The Federal Reserve is expected to start raising interest rates next month and not slow down until well into 2023, though the slope of the increases might be a bit gentler. Insurance companies invest a large portion of their general account in high-quality bonds so annuity rates tend to move in the same direction as 10 Year Treasuries.
Data last week showed U.S. consumer prices rose at their fastest pace since the early 1980s, fueling market speculation for a hefty 50-basis-point hike from the Fed’s March 15-16 meeting.¹
Annuity Rates Going Up March 1, 2022
According to AnnuityRateWatch.com, 18 annuity companies will raise annuity rates effective March 1, 2022. Below are the insurers whose annuity rates are going up tomorrow, 3/1/2022.³
Top Fixed Annuity Rates May 2022
| Term | Insurer | Annuity | Rating | Rate | Apply | |
|---|---|---|---|---|---|---|
| 2 Years | 
| Oceanview | Harbourview 2 | A- | 2.85% | |
| 3 Years | 
| Sagicor | Milestone 3 | A- | 3.50% | |
| 4 Years |
| Sagicor | Milestone 4 | A- | 3.70% | |
| 5 Years | 
| Sentinel Security | Personal Choice | B++ | 4.05% | |
| 6 Years |
| Oceanview | Harbourview 6 | A- | 4.30% | |
| 7 Years |
| Sentinel Security | Personal Choice | B++ | 4.10% | |
| 8 Years | 
| Oxford Life | Multi-Select | A | 3.80% | |
| 9 Years |
| Oxford Life | Multi-Select | A | 3.65% | |
| 10 Years | 
| Atlantic Coast Life | Safe Haven | B++ | 4.15% |
Visit our online annuity store to access the rest of today’s best fixed annuity rates.
Notable Annuity Rate Increases for May 2022
Sagicore Life Insurance Company 3 year fixed annuity rate increases to 3.50% guaranteed for 3 years with 10% free withdrawals in years two and three.
Fidelity & Guaranty Life also raised their S&P 500 annual point-to-point cap to 7.00% on the Accelerator Plus 10 fixed index annuity.
Oceanview Life and Annuit Company’s 6-year annuity rate increased to 4.30% guaranteed for the duration of the 6-year contract period.
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What are Annuity Rates?
An annuity rate is a percentage by which an annuity grows each year. All annuities share some common similarities such as tax deferral and the ability to generate income guaranteed to last your lifetime. The way an annuity credits interest varies depending on the type of annuity.
Comparing Annuity Rates
There are a handful of factors that impact an annuity rate (besides the type of annuity you buy).
- Length of an annuity contract
- How much money do you invest
- Extra features you purchase
- Age
- Life expectancy
- Gender
Types of Annuities
Fixed Annuity Rates
Fixed annuities pay a guaranteed rate for a set period of time (usually 2 years to 10 years). An annuity is not FDIC insured, they are guaranteed by the claims-paying ability of the issuing insurance company. That is why it is important to consider the financial ratings of the issuing company when shopping for an annuity. Generally, the longer the annuity contract’s term the higher the annuity rate will be – but that isn’t always the case.
Fixed Index Annuity Rates
Fixed index annuities are a type of fixed annuity that credits interest based on the performance of an external stock market index. Indexed annuities guarantee a floor of zero percent each year so you know you can never lose your money; even if the stock market crashes. Instead of offering a guaranteed rate like a fixed annuity, index annuities credit interest to your account when your selected index performs. When the stock market index does not perform you are credited with a zero for the contract year.
You can access today’s best-fixed index annuity rates here.
Variable Annuity Rates
Variable annuities earn investment returns based on the performance of the investment portfolios, known as “subaccounts,” where you choose to put your money. The return earned in a variable annuity isn’t guaranteed.
The value of the subaccounts you choose could go up or down. If they go up, you could make money. But, if the value of these subaccounts goes down, you could lose money. Also, income payments to you could be less than you expected.
Single-Premium Immediate Annuity Rates
Single premium immediate annuities begin to make income payments immediately. When you annuitize you give convert your asset to income steam and give up control of your money completely.
For this reason, SPIAs are not very popular, according to the Secure Retirement Institute, immediate annuities were only 2.29% of all annuity sales during the first 9 months of 2021.
Find out how much an annuity would pay you using our income annuity payout guide; these numbers are based on fixed index annuities with an income rider.
Annuity Types Comparison Chart
| Type of Annuity/ Features | Variable Annuity | Index Annuity | Fixed Annuity | Immediate Annuity | Longevity Annuity |
|---|---|---|---|---|---|
| Principal Protection | No | Yes | Yes | Yes | Yes |
| Liquidity Optioins | Yes | Yes | Yes | No | No |
| Maintain Control of Asset | Yes | Yes | Yes | No | No |
| Tax-Deferral | Yes | Yes | Yes | No | No |
| Guaranteed ROR | No | No | Yes | No | No |
| Guaranteed Income | Yes | Yes | Yes | Yes | Yes |
| Cost of Living Adjustments (COLA) | Yes | Yes | No | Yes | Yes |
| Death Benefit | Yes | Yes | Yes | Yes/No | Yes/No |
| LTC Enhancements | Yes | Yes | Yes | No | No |
Federal Reserve and Annuity Rates
Current annuity rates often mirror the interest rates available in bonds. When bond rates increase, annuity rates usually go up as well. That’s because insurance companies invest most of their general account in fixed income securities, such as high-grade bonds.
The Federal Reserve signaled it would begin steadily raising interest rates in mid-March, its latest step toward removing stimulus to bring down inflation.
The Federal Reserve is expected to start raising interest rates next month and not slow down until well into 2023, though the slope of the increases might be a bit gentler. annuity rates tend to move in the same direction as 10 Year Treasuries because insurance companies invest a large portion of their general account in high-quality bonds.
Data last week showed U.S. consumer prices rose at their fastest pace since the early 1980s, fueling market speculation for a hefty 50-basis-point hike from the Fed’s March 15-16 meeting.¹
Fed Chairman Jerome Powell said Wednesday that the central bank was ready to raise rates at its March 15-16 meeting and could continue to lift them faster than it did during the past decade.
“This is going to be a year in which we move steadily away from the very highly accommodative monetary policy that we put in place to deal with the economic effects of the pandemic,” he said at a news conference following a Fed policy meeting.²
If that holds true annuity rates may continue to rise throughout 2022.
Sources:
Wall Street Journal. (2022, January 26). Fed Interest-Rate Decision Tees Up March Increase. Retrieved from: https://www.wsj.com/articles/fed-tees-up-march-interest-rate-increase-11643223603
- Reuters. (2022, February 17). Factbox: What global banks forecast for Fed rate hikes in 2022. Retrieved from: https://www.reuters.com/business/finance/what-global-banks-forecast-fed-rate-hikes-2022-2022-02-11/
- annuityratewatch.com
Disclaimer:
Annuity product guarantees rely on the financial strength and claims-paying ability of the issuing insurer. Annuities are not guaranteed by any bank or credit union and are not insured by the FDIC or any other federal government agency.
Surrender charges may apply to withdrawals during the surrender period. A 10% IRS penalty may apply to withdrawals prior to age 59 ½. Annuity product guarantees rely on the financial strength and claims-paying ability of the issuing insurer.
Rates that may be provided online, by fax, mail, email, or phone are estimates and are generally reflective of the best rates available for various annuity products as of the date that any rate comparisons are prepared by us.
Rates provided in this manner are not firm quotes or offers, but rather estimates which are based on information provided to us by you and by the various insurance companies quoted. Final rates and contractual provisions will always be specified in the issued contract/policy.
