"An Act relating to individual deferred annuities; and providing for an effective date."
"...the proposed insurance code revision deals with guaranteed minimum interest rates that determine minimum values holders of fixed annuity products must receive upon policy surrender..."
- Rep. Coghill
House Bill 184 is an act relating to individual deferred annuity products that are regulated by the Alaska Division of Insurance under Alaska insurance statutes. The current economic trends and the corresponding drop in market interest rates prompts the need for this legislation. Specifically, the proposed insurance code revision deals with guaranteed minimum interest rates that determine minimum values holders of a fixed annuity product must receive upon policy surrender. This law would provide two basic essential provisions:
Give companies relief in times of low interest rates and
Provide an appropriate minimum guarantee for the consumer.
As originally introduced, the bill would have simply reduced the guaranteed minimum interest rate to 1.5 % from the current 3% rate. This reduction reflects the decline of yields on fixed investments that have occurred over the last two years, and presented a practical short-term response to this problem that over 16 states have already addressed and adopted.
Even with the declining rates, fixed annuities present an attractive choice for millions of conservative, long-term investors-increasingly so as equity markets continue to produce losses or weak returns. The 1.5% figure would have made these products continually viable and available.