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Indexed Annuities Income Rider from Lincoln Financial


Despite disappointing second-quarter annuity sales, Lincoln Financial has launched a new income rider on three families of indexed annuities, signaling a confidence in the future of annuity products. According to a recent InsuranceNewsNet article, Lincoln’s i4LIFE Indexed Advantage rider is now available on their New Directions, OptiBlend, and OptiChoice FIAs, which are currently sold by commission-based advisors.

“We believe that for most people there will come a time when they need to replace that paycheck and i4LIFE is an excellent way to do that,” said Brian Kroll, head of Annuity Solutions for Lincoln Financial. “The rider is really to broaden our portfolio and bring tools from our variable annuity suite to our FIA suite.”

The new rider for the index family is a derivative of the i4LIFE Advantage rider, which has been available on the company’s variable annuity products since 2000. Holders of LIncoln variable annuities have made over 150,000 elections of i4LIFE Advantage, which represents over $30 billion of i4LIFE assets.

The i4LIFE, or “income for life,” rider is not the only one available on Lincoln indexed annuities. The new release joins Lincoln’s LIfetime Income Edge rider which offers guaranteed lifetime withdrawal benefits on some of the company’s FIAs. But according to Kroll, i4LIFE is “more of an immediate income product.” The index rider, which launched last month, has been in the works over the past two years and comes with a 0.95% annual fee of the FIA account value to pay for the income guarantees.

Trends from earlier this year showed a significant shift away from annuities with guaranteed living benefits (GLB) and towards annuities focused on accumulation. Todd Giesing, assistant research director of LIMRA Secure Retirement Institute, noted that in the first quarter of this year, annuity companies sold $6.7 billion worth of FIA without GLBs, compared to $6.5 billion worth of FIAs with GLBs. Despite this, Kroll added that the future’s still bright for these products as baby boomers continue to search for income.

With the sting of the 2008 financial recession still in the memories of many pre-retirees, many are thinking about protecting their principal and guaranteeing income, as the bull market continues to age.

“Longer term, FIAs are growing,” Kroll said. “They’ve had strong growth over the last three, four or five years.”

The indexed annuity market closed out 2016 with record sales hitting $58 billion, up almost 10% over 2015 numbers. While second-quarter sales fell nearly 6% when compared to the year prior, they were still up 13% from the first quarter of this year. If FIA sale don’t top last year’s record, they are expected to at least come very close.  On the contrary, variable annuity market sales continue to drop with a 21% dip in 2016. A rebound in 2017 is not expected. In the second quarter, variable annuity sales fell 8% from the year before, as reported by LIMRA Secure Retirement Institute.

Written by Rachel Summit

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