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New Products: Fee-Based Variable Annuity & Immediate Annuity


Fee-based annuities are the newest in demand product, according to “Big insurers launching fee-based annuities” by Investment News’ Darla Mercado.  These simpler and lower-cost annuities are geared towards dually registered advisers.  One of the first products is Allianz Life Insurance Company of North America’s fee-based variable annuity.  The company just filed their request with the SEC and is looking into similar new products to release next year.

New York Life Insurance Co. is also looking to release a fee-based single-premium immediate annuity sometime this year.  While MetLife Inc. is looking into releasing a similar product, they don’t have anything definitive right now.  Traditionally, fee-based advisers have not shown much interest in annuity products.  After the financial crisis though, they seem open to products offering guaranteed lifetime income.  Some smaller insurers have had success in offering similar products to fee-based and fee-only advisers, but the sales account for a minuscule amount of the annuities market.  Time will tell whether large insurers will have similar success with fee-based annuities.

There are many options for these fee-based annuities.  New York Life offers a trailing basis-point commission instead of a one-time commission up front.  They also have an option where the annuity is in a managed account program similar to fixed indexed annuities.  Fee-based advisers are often looking for the lifetime income benefit without all of the other benefits annuities offer for an extra charge.  These fee-based annuity products may be just what they are looking for.

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