New Annuity Options Focus on Income, Growth and Security

There is a big focus on income with some of the newest annuity products introduced this year. In Investment News’s “Allianz, Securian Among Insurers Focusing on Income Annuities,” Linda Koco explains the current trend. Based on the late summer product introductions, Koco says that retirement income and security are the big focuses for fall.  Accumulation is given a lot of attention as well, but not as much as income. These focuses are being shown in four different ways.

Those people who have less risk tolerance are calling for a floor under their potential loss in an index. Allianz Life’s Allianz Index Advantage Variable Annuity has a new “index guard” crediting strategy that sets a floor against large losses in the index. Consumers who buy variable index annuities are typically willing to take on the risk of small index declines, but they are asking for a floor to protect them against large losses in their index. The minimum floor for this new index strategy is -25 percent, although the current level is -10 percent. Negative index returns beyond the floor don’t reduce the contract value. If the index increases, you will receive that return up to any cap that is in your contract terms. Allianz Life’s annuity also offers two other strategies; one that protects against small index losses and another that protects against any loss in the index. Each strategy has a different cost associated with it and is for those seeking security from their annuity product.

Securian Financial Group introduced a new variable annuity benefit that provides growth without risk via a Guaranteed Minimum Accumulation Benefit (GMAB). The CalledSureTrack Plus 90 is available with some of their variable annuities and guarantees that the contract value will be the greater of your purchase payments or 90% of your highest anniversary contract value. GMWBs and GMIBs get much more attention than GMABs, but the latter benefit helps clients protect their initial investment and gives them the potential to grow their assets. While consumers know that they might be able to achieve greater investment growth in the markets, many still seek guarantees on their initial investments in case the market declines.

Jackson National introduced a new rider that will allow its customers to start and stop their annuity income. The LifePay lifetime income benefit rider can be added to the Jackson AscenderPlus Select Fixed Index Annuity. You are still guaranteed lifetime retirement income, but have the option to stop and re-start income payments if life events change. This rider can be added on at any indexed rider option anniversary or at the start of the contract. There is also the option to cancel the rider, which costs between .50-.80% annually. Jackson says that this rider offers flexibility and a way to generate a lifetime stream of retirement income.

QLACs have been big news for the past year or so. Fidelity Insurance Network recently introduced three Qualified Longevity Annuity Contracts (QLACs) that can be used in qualified retirement accounts. Principal Financial Group, Guardian Life and MetLife will issue these annuity products. It’s been about a year since the government began allowing the use of QLACs in defined contribution plans to defer a percentage of your savings up until age 85. While there are currently 10 companies offering these specific QLACs, the addition of the Fidelity Insurance Network’s large number of retirement plans is likely going to bring a lot of attention to the products. Fidelity understands the need to focus on retirement income at older ages, especially when retirement could be three decades long for some people. QLACs help guarantee income later in life and often reduce current taxes.

Allianz, Securian, Jackson National and Fidelity Insurance Network have new products and features representing the fall annuity trends: retirement income, growth and security.

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