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.

Why Financial De-Risking May Leave Consumers at a Loss

The term de-risk has been appearing frequently in recent financial news. 

General Motors’ recent decision to offer lump-sum...

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Mark Warshawsky on the Retirement Income Market

Mark J. Warshawsky is Director of Retirement Research at Towers Watson.

Dr. Warshawsky served as assistant secretary for economic policy at the U.S. Treasury Department from 2004-2006 and he has held senior level economic research positions at the Federal Reserve Board, the Internal Revenue Service and...

3.87 Percent Inflation Increase for Penn Mutual Variable Annuity

The Penn Mutual Inflation Protector variable annuity was launched in November 2010. This variable annuity product incorporates a living benefit feature and is designed to provide owners with an income base that keeps pace with the rate of inflation. The income base of the Penn Mutual Inflation Protector increases based upon the greater of: The rate of inflation as measured by the consumer price index urban (CPI-U), or; Annual market performance. The inflation increases are capped at a maximum...
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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. The...
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Low Interest Rates Affecting Insurance Companies

The ultra-low interest rates that exist at the moment are affecting insurance company profitability and operations. On the profitability side, current policy premiums must be reinvested into bonds that have low yields and are fully priced. Investment income and underwriting profitability (which is often rare) are the main components of insurance company profitability. As large fixed income investors, insurance companies are challenged in the current interest rate environment. On the operations...
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