Annuity FYI Blog

Prudential has made improvements to its optional Highest Daily Lifetime 7 Plus variable annuity rider, in addition to expanding its availability to investors 45 and older. According to the Retirement Income Reporter, the Highest Daily Lifetime 7 Plus option is a minimum income guarantee that locks in the highest daily value occuring during the annuity’s life. Until lifetime income starts, that value will grow by a 7% compound rate annually. 

Another new feature of this product is that if no lifetime withdrawals are taken in 25 years, Prudential will use an income base that is 600% of the account value when calculating income. Of course, the fees of this optional benefit will depend on which of many Prudential’s annuities is purchased.

Limra International says that fixed annuity sales increased by 79% in the fourth quarter of 2008, according to the Wall Street Journal’s Leslie Scism. The jump is credited to olders individuals fearing that the current market turmoil will torpedo their retirement funds. Fixed annuities are considered far less susceptible to wild swings in value.

Investment News’  Darla Mercado recently gave an update on how the annuity industry is dealing with a new rule. Last year, the Financial Industry Regulatory Authority (FINRA) passed Rule 2821, a suitability rule in order to ensure that variable annuities are sold to the appropriate investors. Provisions in the rule include:

• suitability checks (i.e. liquidity needs, taxes, client’s assets)
• formal supervisory systems
• principal review for all regulated transactions