Many retirees are worried about inflation hurting their portfolios. To help fix this, Penn Mutual has added an inflation rider to their variable annuity products. This information comes from Insurance News Net’s Cyril Tuohy in the article, “Penn Mutual Launches VA Inflation Protection Rider.” There are three different types of Penn Mutual’s Smart Foundation variable annuities: Smart Foundation VA, Smart Foundation Flex VA and Smart Foundation Plus VA. This new inflation rider can be added to any of the three products. It is the fourth optional benefit that you have the choice of adding to Penn Mutual’s Smart Foundation variable annuities. The inflation protection withdrawal benefit guarantees that your retirement income will grow at least as much as inflation rises. The growth is capped at 6% after that. Penn Mutual’s inflation rider is tied to the Consumer Price Index for all Urban Consumers.
Variable annuity sales were down between 1%-1.5% last year, depending on which research you use. They lost some sales to fixed and fixed indexed annuities. Part of the reason for this decline is that many insurance companies scaled back their benefits to make up for tumultuous financial markets. Some insurance companies wanted fewer variable annuity sales to make up for losses in the past six years. Now that markets are stabilized and insurance companies are getting back into the variable annuity game, benefits are becoming increasingly competitive again. Penn Mutual wants to meet the changing needs of their clients and adapt with the changing market conditions. Many people are expecting interest rates to continue on their upward path since the Federal Reserve made the decision to scale back on their bond-buying program. Interest rates are low from a historical standpoint, but have been steadily rising the past few years.
Rising interest rates mean less purchasing power for retirees and others who survive off of fixed income. Some type of inflation protection is necessary for your retirement plan and annuities are one place to get that protection. If you have questions about variable annuity inflation protection riders, an expert at Annuity FYI would be happy to assist with your needs. Penn Mutual is excited to offer a new inflation rider for their line of Smart Foundation variable annuities.
Written by Rachel Summit