Acting to Reduce Risk
Many variable annuity issuers made changes
to older products or introduced new ones.
By Frank O’Connor
Across the variable annuities sector, numerous issuers took steps to reduce risk in the third quarter. Some insurers replaced older benefits with more expensive, less generous and more restrictive versions. Others closed older products or prohibited
additional purchase payments to existing contracts. But new products
were issued as well — many seem designed to appeal to underpenetrated
market segments, primarily the RIA and direct sales channels.
REVISING THE LINEUPS
Allianz closed the C and L versions of its Vision contract, while launching
Retirement Advantage, a low-fee product with a guaranteed withdrawal benefit
tied to the 10-year Treasury. It’s designed
to appeal to fee-only/fee-based advisors.
Hartford reduced withdrawal percentages to 4.5% from 5% on the Future5
lifetime withdrawal benefit and raises
fees for the single and joint version of
Future6 (to 1.05% from 0.85% and to
1.3% from 1.1% , respectively). Prudential
suspended sales of the bonus version
of its Premier Retirement product and
launched a new lifetime withdrawal benefit with lower withdrawal rates, a higher
fee (to 1% single or 1.1% joint from 0.95%), tighter investment restrictions
and limitations on the ability to add premiums after issue.
MetLife closed several income and withdrawal benefits (GMIB Plus III,
GMIB Plus IV and Lifetime Income Solution Plus) and age banded the no-lapse withdrawal percentage on its GMIB Max IV by introducing a 4.5%
withdrawal percentage for ages 62 to 67, versus the previous 5% at any
age. Lincoln introduced an optional step-up feature for its i4Life Advantage benefit and closed its 4Later Advantage with Guaranteed Income
Benefit. SunAmerica lowered the fixed increase to 5.25% from 6% on its
Income Builder GLWB when offered on the O-Share contract.
Jackson National increased both the pricing of its flagship Perspective
II contract by 0.05% and issued a new lifetime withdrawal benefit, Life-
Guard Freedom Flex; at age 65, the withdrawal rate is 4.75% and the fixed
increase of the benefit base is 5%, compared with
a 5% withdrawal rate and 6% benefit base in older
versions of the rider. Ohio National decreased the
withdrawal percentage to 5% from 5.1% on its sin-
gle life withdrawal benefit and to 4.5% from 5% on
the joint life version.
Of the new products
that were issued,
designed to appeal
primarily the RIA and
direct sales channels.
Frank O’Connor is product manager for annuity
data at Morningstar.