MetLife was a big player in the variable annuity game for years, but they scaled back on their benefits in the recent past to make up for some turmoil in the markets. They are back in the game now with a new variable annuity guaranteed lifetime withdrawal benefit rider. In “MetLife gets back in the variable-annuity-with-living-benefits game,” Investment News’ Darla Mercado introduces MetLife’s new living benefits rider. This new GLWB rider is called FlexChoice and was released in the middle of last month.
2011 was the year for MetLife’s variable annuities with sales of $28.4 billion. Their GMIB Max rider was one of the hottest living benefits of the year. The company scaled down that rider over the next year or so because they didn’t believe that those high variable annuity sales were manageable in the long term. This took MetLife’s variable annuity sales down to $6.3 billion in 2014. Now that the company achieved their goal of scaling back on the benefits that they worried were too risky for their profitability, they are ready to introduce a new living benefit rider. MetLife is still selling their GMIB, but with this new product they are focusing on a GLWB. MeLife’s GMIB rider became less competitive as the company de-risked.
The FlexChoice GLWB allows MetLife to offer the competitive features that clients are looking for while also maintaining the company’s profitability. Their executive vice president believes that GLWB’s are more accepted in the marketplace. MetLife’s FlexChoice has a 5% roll-up. It was introduced at a cost of 120 basis points and comes in two different versions. FlexChoice Level pays a continuous rate over your lifetime. This rate is currently 5% for an individual or 4% for a couple if payments begin between the ages of 65 and 74. FlexChoice Expedite allows clients taking their first withdrawal between ages 65 and 74 to take a 6% withdrawal rate until their account balance goes down to zero. If you are under the age of 79 when the balance hits zero, your withdrawal rate will become 4.5% for an individual or 3.5% for a couple.
The first version of this GLWB is meant for consumers who are worried about longevity risk and looking for a way to create income that will last over their lifetime. The second version is for those people who are less concerned with the lifetime income aspect of the product. Another benefit of MetLife’s new rider is that you don’t have to decide whether you want the product as a single or joint life version right at purchase. In order to protect themselves, MetLife requires that 80% of your allocation is in the MetLife Protected Growth Strategies portfolio. The other 20% can be in fixed income or balanced funds. MetLife is excited to regain some of the variable annuity market and believes that this FlexChoice variable annuity GLWB rider provides consumers with both the income and the flexibility they desire.