NAFA, the National Association for
Fixed Annuities, is the premier trade association exclusively dedicated to
fixed annuities.
For the issuer,
fixed annuities are subject to significant asset/liability mismatch risks, as described above.
Risk: A distinction between variable and
fixed annuities is investment risk.
They used to be defined by two categories:
fixed annuities, which guarantee a minimum return (usually 3%) or minimum monthly payment, and variable annuities, which allow the owner to invest money in stock and bond mutual funds with the hope of securing a higher return.
The article also does not seem to consider the appropriateness of
fixed annuities, which can typically offer a higher payout than CDs on a tax-deferred basis.
Outside jumbos, one new product enables buyers to sock away all or part of a down payment on a home in investment vehicles such as variable and
fixed annuities, and in life insurance policies.
If the supplemental promise is a defined benefit,
fixed annuities are purchased based on the benefit accrued at the time of purchase.
Total annuity deposits of $3.0 billion were up 50% from the prior-year quarter as both variable and
fixed annuities benefitted from product and distribution expansion.