Symetra Helps Customers Avoid Renewal Rate Roulette
New Fixed Annuity Design Takes the Guesswork Out of Annual Interest Rate Adjustments
Bellevue, Wash. — (March 12, 2007) — Symetra Life Insurance Company is pioneering a new approach to interest rate renewals on fixed annuities. The
Symetra Custom Fixed Annuity now guarantees that, throughout the annuity’s entire surrender period, the annual interest rate on the annuity will never be less than half a percentage point (50 basis points) below the first year’s base rate at purchase.
This guarantee is important as renewal rates can often be an unpleasant surprise for purchasers of fixed annuities. That is because high introductory interest rates may decline unexpectedly after the initial interest rate period ends, causing “rate shock” when the annuity’s renewal rates kick in. Annual interest rates for fixed annuities typically reset based on company policies, market conditions, and other factors. Often, these renewal rates reset to minimums that are well below the going market rate as issuers try to recover the high initial interest rate offering.
In addition, fixed annuities may include a long surrender period, meaning customers typically cannot break the cycle of low annual rate renewals without paying steep penalties. While some providers offer bail-out provisions, which enable the customer to withdraw funds without surrender penalties should rates fall to a certain level, the customer must actively monitor rates throughout the life of the annuity to determine whether to exercise this option.
With its enhanced product design, Symetra is seeking to improve transparency in rate renewals and make fixed annuities less complicated for the customer.
The new guarantee ensures customers can avoid unpredictable rate decreases during the annuity’s surrender period. Any interest crediting on top of the base rate is clearly stated up front and customers are assured subsequent rates will align closely with the base rate at purchase. Today, for example, a customer would be certain their annuity would never earn less than a 3.25 percent rate of return during the first seven years, even after the additional interest crediting period ends.
“Understandably, rate renewal integrity has become a major issue among fixed annuity customers,” said Rich Lindsay, senior vice president of life and annuities for Symetra Life Insurance Company. “This new guarantee means that customers no longer have to take a ‘trust but verify’ approach when purchasing these annuities. They now know from the start the minimum rate Symetra guarantees it will pay when renewal time comes. It’s just one of the ways we are working to bring greater clarity and simplicity to retirement planning.”
The
Symetra Custom Fixed Annuity provides a reliable way to build earnings tax-deferred. The annuity’s returns are guaranteed by the company over a fixed period of time. Customers have the option of locking-in an interest rate for one, three, or five years before renewals begin. During the first year, customers can also get additional interest crediting on their base rate. Plus, the product can become a stable source of funds during retirement, as the annuity’s accumulated value can be converted into an enduring income stream that the customer cannot outlive.
About Symetra Financial
Symetra Financial is a family of companies with nearly a half-century of experience providing retirement plans, employee benefits, annuities and life insurance through independent advisors and agents nationwide. Its insurance company subsidiaries have nearly $20 billion in assets
1. Symetra Financial is owned by an investor group led by White Mountains Insurance Group Ltd. and Berkshire Hathaway Inc. For more information, visit Symetra Financial’s website at
www.symetra.com.
1 Source: Total GAAP assets per financial statements of Symetra Life Insurance Company, December 31, 2006.
Symetra Custom Fixed Annuities are issued by Symetra Life Insurance Co., 777 108th Ave. NE, Bellevue, WA 98004. Products not available in all U.S. states or any U.S. territories. Contract number in most states is LPC-1536 8/04.
Symetra® and the Symetra Financial logo are registered service marks of Symetra Life Insurance Company, 777 108th Avenue NE, Suite 1200, Bellevue, WA 98004.
