The three and five year guaranteed fixed interest rate annuity environment is a leading consumer item for online and direct mail marketing pieces. The rates for three years are around 3.25% and the five years are around 3.90% at the time of this blog was written. Those rates are extremely attractive in light of the market meltdown and other competition interest rate vehicles. But a couple of caveats need to be included in your ad campaigns to fulfill full disclosure requirements.
The first and foremost disclaimer is that these annuities are not FDIC insured. That being said the financial ratings of the issuing carrier then become an important material fact that needs to be included in your ad. Some of the top interest rates in fixed annuities are issued by BBB+ or below rated carriers. Some consumers may feel more comfortable with an A or better rated carrier. However, the consequence of using higher rated carriers is generally a lower guaranteed fixed interest rate. So be advised, the disclosure of the carrier’s rating is a critical component in the consumer’s decision-making process.
Many of these guaranteed fixed rate annuities have no withdrawal privilege, so liquidity needs to be in the conversation. Some guaranteed fixed rate annuities allow for withdrawals, but at lower the credited interest rate. This may be a value item for the consumer, so it needs to be in the conversation or advertisement.