Living Benefits

Living benefits or guaranteed living benefits (GLB) 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). 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.

Jackson Approaching Variable Annuity Capacity Limits

In yet another sign of variable annuity capacity constraints, Jackson National recently announced that they are approaching the upper range for 2012 sales of variable annuities with guaranteed living benefits. Jackson’s November 8 press release indicates the company has roughly $1 billion worth of remaining 2012 capacity. Jackson indicated that this remaining capacity will be used for new product sales and that they will no longer accept new 1035 exchange business or qualified transfers...
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Understanding the Value of Living Benefit Guarantees

Advisor Perspectives just published the first in a series of articles from Wade Pfau. These pieces are important and should be read by anyone considering guaranteed lifetime withdrawal benefits or any of the other optional...

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No Time for Guarantees

The concept is seductive: a financial product that provides upside exposure in the event that equity markets trend up and to the right while also providing a floor of protection in case the bottom falls-out from under markets again.

Sort of like having your cake and eating it too. Very tempting in light of the massive financial uncertainty that has existed for the past several years.

Products playing into this “upside plus protection” theme include (but are not limited to) variable annuities with guaranteed living benefits, standalone living benefits (SALBs) and, to a certain extent, indexed annuities.

However difficult it might be, financial services consumers must try to look at guarantees with ruthless objectivity because there are some strong...

What is Driving the Rush for the Variable Annuity Exit?