Variable Annuities Mix it up this Summer

“A Summer Crop of Variable Annuities” in the Retirement Income Journal summarized this summer’s spectrum of variable annuity products.  Author Kerry Pechter stated that insurance companies are either reducing the cost of the product and making it much more simple or keeping the elaborate benefits and increasing the cost.  John Hancock and MetLife introduced simplified versions while Allianz Life and Genworth Financial’s new products are similar to traditional variable annuities.  As equity markets have rallied this summer from a DJIA of 6,700 points in March to 9,100 this week, this may be the time for some new products.

John Hancock Life’s AnnuityNote is one of the more straightforward products on the market.  There are one investment and one income option and only one inclusive cost.  With an S&P rating of AA+, John Hancock is aiming this product to the advisers that don’t normally recommend annuities, marketing AnnuityNote like “a mutual fund with a true guarantee.”  The Simple Solutions variable annuity from MetLife is also meant to be easily understood and lower cost than traditional VAs, while still offering good benefits.  It has a guaranteed lifetime withdrawal benefit (GLWB), one income option, four options for investments, and a short application that is only three pages.  The annuity rates of payout vary with age and investors have a choice of how they annuitize.

On the other side of the spectrum, the Vision variable annuity from Allianz Life has a complex prospectus and fees can be around 4%.  An Investment Protector and and Income Protector are the main riders offered with this product.  As you grow closer to receiving the income payments, the investments become more conservative, no matter which investments are chosen.  Their Vice President stresses that this new offering communicates what the company has learned in a tough market about product offerings and cost.  RetireReady One from Genworth also offers an Income Protector for its GLWB rider.  Speak with an expert about the details regarding any of these variable annuities.

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