The NAIFA 2014 national conference took place last month in San Diego. This National Association of Insurance and Financial Advisors career conference and annual meeting helped to inform those in the financial industry of changes happening this year. Insurance News Net posted a series about some of the things “Heard In The Hallways – (at the) NAIFA 2014 Convention.” We often discuss the importance of guaranteed income to consumers. As the industry has changed and insurers have scaled back on some of their benefits, the question of whether guaranteed lifetime withdrawal benefits (GLWB) are still desirable has come up. Insurance News Net asked whether these GLWB riders are still in demand with fixed and variable annuity products.
Three different financial experts gave their opinion on the current state of guaranteed lifetime withdrawal benefits. The first said that there is a very high demand for GLWBs from consumers who have accumulated retirement savings and are concerned about losing the money they worked so hard to save. Those consumers looking to turn their savings into a stream of income are looking for a few things from these riders. They want their money to be protected against market downturns, but they also want to be able to take advantage of market gains. This makes variable annuities with GLWBs desirable to many consumers. Most people don’t know the term GLWB, but they are able to perfectly describe the benefits that they want in a retirement product and these riders fit the bill. Not all insurance companies are offering GLWBs with variable annuity products anymore, so it might take a bit more research to find a strong company offering these benefits.
Another advisor confirmed that the demand is still there for variable annuities with guaranteed lifetime withdrawal benefits. They have been in high demand for years and will continue to be in demand for years to come. The greatest demand comes from people who are 50 and over and looking for fixed income payments to carry them through after retirement. This GLWB guarantee protects your income without subjecting it to potential market downturns.
Finally, the third advisor says that while there is still high demand for GLWBs, sales of these riders have decreased because of insurers cutting back on the benefits and charging higher fees for the guarantees. He believes that deferred income annuities and single premium immediate annuities will become the top income solutions if interest rates increase. SPIAs and DIAs can often give consumers more income than a variable annuity with a GLWB for the same premium price. For those worried about inflation, there are affordable inflation riders that can be added to a SPIA or DIA as well. That option is not valuable when added to a variable annuity with a GLWB. Current market conditions make variable annuities with guaranteed lifetime withdrawal benefits attractive, but that might change if interest rates continue to increase. Regardless of which annuity product you use, the guaranteed income available with annuities is hard to match elsewhere.