In an effort to address both inflation and longevity, Ohio National has launched a new fixed indexed annuity (FIA) guaranteed living withdrawal benefit (GLWB) rider. According to a recent article from InsuranceNewsNet, ONdex Income Accelerator GLWB is guaranteed to increase by at least 3% a year. Typical GLWBs don’t necessarily increase once withdrawals begin.
With the ONdex Income Accelerator GLWB rider, the interest credited is an amount multiplied by three, or an amount to which is added 3% of the contract value, whichever is greater. This provision is applied in the first 20 index years of the contract, while no withdrawals are taken. So, during a year when the contract value earns 2.5%, the rider value would receive a credit of 7.5%. In a year when the contract value earns 0% interest, the rider value would automatically rise by 3%.
“We’re addressing longevity and inflation,” said Ian Laverty, vice president of annuity product management at Ohio National. “There’s a lot of value in how this fits into a retirement income plan.”
The rider can generate a credit as much as 10% in a good year, which the insurer claims is a big improvement over competitor products with a fixed credit.
“This is serving a need for a particular group for income,” stated Gary E. P hifer III, assistant vice president of sales and marketing at Ohio National.
The annual charge, which is age dependent at issue, is between 0.75 and 1.15% of the rider’s value. Policyholders will also be charged $30 if the contract value drops below $50,000.
Ohio National entered the FIA market last year with the launch of ONdex Annuity and ONdex Freedom. Senior vice president of annuities strategic business, Michael J. DeWeirdt, said that joining the fixed indexed annuity market gives Ohio National the chance to grow while diversifying the company’s annuity market risk exposures. The company, which traditionally sold variable annuities, is distributing ONdex through wirehouses, independent broker-dealers and banks.
Written by Rachel Summit