Every spring insurance companies release variable annuity product updates and introduce new products to the market. The filings made with the Securities and Exchange Commission give us a preview of what’s to come in the variable annuity market. This year was a slow spring for variable annuities, but there were three notable product changes from three big insurers. Low interest rates have kept variable annuity innovation at a lower level over the past few quarters and the beginning of this year has been no different. Darla Mercado wrote about the newest variable annuity innovations for Investment News in the article, “Spring variable annuity prospectuses and updates are here.”
Voya Financial filed with the SEC on May 1 introducing a new hybrid annuity. These hybrid annuities or structured products have come and gone in the past and it looks like they are back in the marketplace. Voya’s PotentialPLUS annuity is a deferred annuity that the company describes as a combination of a variable, fixed and indexed annuity. Structured product annuities link your returns to an index, but cap the earnings at a level that is changed periodically. This allows for market upside potential but protects your money from part of market losses, should they occur. Voya’s PotentialPLUS annuity uses four different indexes and currently has a maximum buffer of 10% that can be adjusted each year. Your cap rate and index credit are guaranteed for one year. The variable part of Voya’s new annuity is the subaccount called the Voya Liquid Assets Portfolio. There is a 7 year surrender period for this annuity. Surrender charges start at 8% and go away after the 7 year term is up.
AXA Equitable is updating their variable annuity, according to their latest SEC filing. The Retirement Cornerstone 15.0 is a newer version of the 13.0. There is a Guaranteed Minimum Income Benefit Multi-Year Lock with the Retirement Cornerstone 15.0 that wasn’t previously available. There are two different formulas where the benefit base on the GMIB can increase with a step-up. The first is a 2 year lock where the increase equals your purchase payments with 4% compounding. The second is the multi-year lock that increases the benefit base each year by your purchase payments with minimum 3% compounding. Your lock lasts for the entire surrender period. Eight percent is the maximum compounding factor. AXA has also added an RMD Wealth Guard guaranteed minimum death benefit. When you elect the GMDB and take your RMD withdrawals starting at age 70 1/2, you will not take money away from your beneficiaries’ future death benefit amount.
Allianz Life introduced two new investment options to help protect their variable annuity clients from volatile markets. These are available with new variable annuities as well as existing Allianz Vision and Connections variable annuities. The first fund option puts money over a range of different equities in order to manage volatility when markets are in turmoil. The second fund adjusts equity allocation based upon what is happening the markets. When markets are good, allocation can go as high as 65% and it can go as low as 10% when markets have less than favorable conditions. Although there haven’t been a large number of variable annuity filings with the SEC this year, the current filings show that the variable annuity market is still innovating and looking to help clients get the benefits they desire.