According to Investment News, ING is replacing their variable annuity product with a more simplified version. In “ING to sell stripped-down VA with stripped-down commission,” Darla Mercado gives details about the new product. As of March ING will no longer market its traditional variable annuities. Their new variable annuities will pay out a level commission that is 75 basis points. Typical variable annuities have a trail commission of around 1% so ING’s new product will be less than that.
Advisers may first look at these lowered commissions and see less money in their pocket. But most likely these lower commissions will draw in more customers and be able to generate more sales. Variable annuity fees for the traditional product have recently hit highs of 3-4% in the market. ING believes there is a strong possibility that traditional annuities will soon be pushed out of the markets. They think that the market is going in the direction of these new “stripped-down” annuities with lower fees and commissions. While ING’s variable annuity has a 5-year surrender period, income receipt can begin immediately. They also have a feature where the annuity payment increases as the owner’s age increases.
