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Insurers to Annuity Owners: We Don't Want Your Money

In another bit of fallout from the 2008 Great Recession, major providers of variable annuities are invoking contract provisions they rarely if ever used previously to restrict or ban new money from current clients, especially on the richest guaranteed contracts. Even with what many consider high fees (3.5% or more), insurers are concerned about low interest rates, which increase hedging costs. Low rates may continue as the Fed looks to keep bolstering the relatively weak economy.

Needless to say, account holders are angry, and the SEC is reviewing contract language. In the last 16 months, five insurers have restricted new money flows: Allianz, AXA, John Hancock, Metlife and Prudential.

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