The jobs report was released Friday, 11/6 and the numbers were much stronger than anyone thought. The labor participation rate improved, dropping the unemployment rate down to 5%. That is the lowest rate since 2008. On top of that, there was a modest increase in wage growth, which resulted in a boost on the productivity report released this week.
So, what does that mean to us in the life and annuity business? Some companies that have overreached on interest rates are going to get a break. The 10 year is increasing, and the companies will get closer to their desired spread. This will give the companies that have met their spread target a chance to raise rates, and get a jump on the competition.
So, what about mortality?
The actuarial tables have been changed. Guess what they found out? People are living even longer than they had thought. How is that going to affect us? The payout factors on lifetime income riders will be changed – this is definite. The payout factors will be reduced (if they haven’t already). So, what is the takeaway? It’s time to get your prospects to act now as the payout factors, and the income payout will be reduced after the first of the year.
Volatility…WOW… it is here, as there is still uncertainty in the market.
In order to protect your client and the company, most carriers have adopted volatility controls in their fixed index annuities. So, how are you explaining that to your prospects and clients? If you’re not sure, here is the takeaway: go to www.volcontrol.com for info on most volatility control indices, along with explanations.