Annuities with No Surrender Charge on the Principal

[mikeincolumbuso]

I just ran across a small life company/fraternal that offers a fixed fixed annuity that guarantees the return of principal. The surrender charges are only calculated and deducted from the accrued interests. Are there very many other companies that offer this feature?

 

[Norwayguy]

I just ran across a small life company/fraternal that offers a fixed fixed annuity that guarantees the return of principal. The surrender charges are only calculated and deducted from the accrued interests. Are there very many other companies that offer this feature?

American National, Mutual of Omaha and others offer a ROP annuity option.

 

[Larry Tew]

This is / was common for fraternals several years ago before they re-drew their contracts. Some of those in-force annuities still guarantee 3% and 4% for life.

It was part of the contract, they didn't call it "ROP" but that was the outcome.

 

[Tahoe Ray]

I just ran across a small life company/fraternal that offers a fixed fixed annuity that guarantees the return of principal. The surrender charges are only calculated and deducted from the accrued interests. Are there very many other companies that offer this feature?

To add to Peter's list, Symetra, Guggenheim, Principal, Security Benefit and more have products with an ROP feature. This is only in the MYGA space. There are additional options in the traditional fixed and fixed index arenas as well.

 

[scagnt83]

NYL too. It is standard on all of their FAs.

 

[mikeincolumbuso]

Is there any downside to offering ROP? I know the fraternal also has pretty decent rates as well and I have also seen the FA with 7-8 year surrenders on the total amt of the annuity.

 

[nathan.lee]

Is there any downside to offering ROP? I know the fraternal also has pretty decent rates as well and I have also seen the FA with 7-8 year surrenders on the total amt of the annuity.

No real downside for the client. Well, I guess that is subjective based on how the contract states the ROP can be exercised and whether or not you feel the carrier has priced the ROP feature into the contract properly. (Lower caps, lower rates, higher spread, etc.)

There is a potenial downside for the agent in the form of a commission chargeback. Each carrier/product will have different rules regarding how they treat commission chargebacks when/if the ROP is exercised.