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Guaranteed Living Benefit

Guaranteed living benefits (GLB) or living benefits are optional guarantees that can be embedded into variable annuity products. In the past, variable annuities could come with a guaranteed minimum death benefit (GMDB) which paid a minimum benefit upon death of the annuitant. Over the past decade, however, product development and innovation have flourished, and insurers offer income, accumulation, or withdrawal guarantees that can provide a significant measure of protection against market risk while the annuitant is alive. Some of these “living benefits” include: guaranteed minimum income benefit (GMIB); guaranteed minimum withdrawal benefit (GMWB); guaranteed lifetime withdrawal benefit (GLWB), and; guaranteed minimum accumulation benefit (GMAB). Guaranteed living benefits have proven to be incredibly popular. More than 95% of variable annuity sales in 2007 contained some form of living benefit. Guaranteed lifetime withdrawal benefits (GLWB) have proven to be one of the most popular guarantees.

Variable Annuities without Living Benefits

The popularity of living benefit features is one thing that seems clear when looking at variable annuity sales data.  The vast majority of variable annuity sales include one of several living benefit or guaranteed living benefit features. 

National Underwriter reports that Bellevue, Washington-based Symetra will be selling a line of low cost variable annuities that do not contain any living benefit features. 

Apparently Symetra considers the GLB-free variable annuity as an underserved niche. 

Variable Annuity Sales Total $34 Billion During Third Quarter of 2010

Variable annuity sales in the United States increased 9.7 percent to total $34 billion during the third quarter of 2010.

Variable annuity revenue figures continue to be concentrated among a handful of leading companies:

Annuity Product Persistency Levels are Increasing

Annuity persistency refers to whether people hold on to their existing annuity products or exchange them--typically through a Section 1035 exchange--for new products.

Higher levels of persistency suggest that annuity owners are sticking with existing products which are likely more valuable than what would be available in the current market through an exchange.

Glenn Daily on Buying Annuities and Why it Might Make Sense to Wait

Glenn Daily is one of the top financial advisors in the country. 

Specializing in life insurance and annuities, Glenn is widely recognized for his deep technical expertise and high level of objectivity as his services are strictly on a fee-only basis.

The annuity buying decision is complex and can be affected by commission-based financial incentives. Glenn’s writing, interviews and services are a great way to cut through some of the clutter.

Walter Updegrave Annuity Explanation

A pretty good explanatory piece on annuities from well respected financial journalist Walter Updegrave.

Heavy focus on variable annuities and guaranteed living benefits.

The article can be viewed by clicking here.

AXA Equitable Releases Innovative Variable Annuity

AXA Equitable Life Insurance Company has been an innovator in the variable annuity industry.

The company was a pioneer in the area of guaranteed living benefits with the launch of the first guaranteed minimum income benefit.

AXA has recently launched a new variable annuity product named "Retirement Cornerstone."

Retirement Cornerstone features a "dual account platform" that provides the potential for long-term asset accumulation and growth as well as downside protection through a guaranteed income benefit option.

Incremental Changes in the Variable Annuity Market

Much has been said about the impact of the financial crisis on variable annuity products and insurers.

Wall Street Journal columnist Leslie Scism recently wrote about the first wave of variable annuity product redesigns to hit the post financial crisis market.

Common themes include simplicity, cost efficiency and conservative benefit features.

Scism provides some very good detail on the most recent wave of guaranteed living benefit features.

Source: Wall Street Journal

Longevity Risk and Portfolio Protection Without a Variable Annuity

Two of the most daunting risks faced by the majority of retirees are:

Financial Advisors on the Defensive as Variable Annuities Prove to be Among Best Wealth Management Vehicles of Past Decade

A recent article from Wall Street Journal columnist Leslie Scism discusses the value that has been preserved and delivered over the past several years by variable annuities and living benefits.

Despite intense media criticism and generally negative perceptions among financial advisors, variable annuities have been among the best wealth management vehicles of the past decade.

What happens if I die 5 years into a 9 year annuity? Can my heirs still receive the principal?

The question basically deals with the issues of revocability and bequest motive--both of which are large issues when it comes to annuities.

The short answer is that there are many products and product options that effectively address revocability and bequest motives.

The longer answer is that it completely depends on: a) the type of annuity that you have or are considering, and; b) any "riders" or additional features the annuity might have that can address your concern.

Retirement Income Industry Association Spring Conference 2012

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