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Survey%3A Fied Annuity Buyers Prefer 1%2DYear Guarantees

By Staff Writer

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U.S. consumers seem to expect to see interest rates continue to rise.[@@]

Researchers at Beacon Research Publications Inc., Evanston, Ill., have published data supporting that conclusion in a report on the firm’s quarterly FA market survey.

The survey includes data for 182 U.S. fixed annuity products from 47 manufacturers.

In the market for “book value annuities,” which pay a fixed rate but do not impose a “market value adjustment” on early withdrawals, the percentage of sales involving 1-year interest guarantee periods held steady at about 90%.

But, in the market for annuities that impose market value adjustments on early withdrawals, the percentage of products sold with interest guarantee periods of just 1 year jumped to about 43% during the third quarter, from 18% during the comparable quarter in 2004.

Overall sales of fixed annuities fell about 25%, but sales of immediate fixed annuities rose 26%, possibly in response to widespread publicity about the need for retirees to lock in steady streams of income, Beacon researchers say.