Companies which offer Fixed Annuities & Fixed Indexed Annuities make money in several different strategies depending on the product. Some annuities have caps. The company will make money from interest earned over the cap.
Other annuity products have spreads or fees meaning they will take a % which is set at the time the contract is taken.
Others will have participation rates meaning you participate or get a % of the interest which was earned.
There are a few other ways as well.
if you have a specific question about an annuity you are looking at, do not hesitate to call your Broker or reach out to me.
Regional Marketing Director, Capital Choice Financial Group,
All insurance companies make their money on fixed annuities from what they earn on their investments of the premium paid by the client. They have done their calculations to determine an equitable interest rate, cap, or bonus for the client while speculating on earnings from the market. This is the simple answer.
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Other annuity products have spreads or fees meaning they will take a % which is set at the time the contract is taken.
Others will have participation rates meaning you participate or get a % of the interest which was earned.
There are a few other ways as well.
if you have a specific question about an annuity you are looking at, do not hesitate to call your Broker or reach out to me.