GLWB is kind of confusing

Overall, the Guardian Investor variable annuity seems like a pretty standard, solid offering with features and an expense structure that is in-line with industry averages.

What is somewhat confusing is the optional living benefit features that are offered with the VA.

The Guardian offers a handful of flavors of guaranteed lifetime withdrawal benefit (GLWB).  The company refers to these various flavors as:

• Target Now
• Target Future
• Target 200
• Target 250

The Target Now comes with step-ups only and no annual minimum guarantee.  The Target Future has the step-ups and a 7 percent (as of 2012) minimum guarantee.

The Target 200 (which is more expensive than the Target Future) has the 7 percent guarantee and additionally offers a 200 percent cumulative guarantee over 10 years.  Confusing as 7 percent compounded over 10 years is roughly a doubling, so why pay for the cumulative guarantee.

Similarly, the Target 250 offers a 250 percent cumulative guarantee over 15 years for an additional fee.  The thing is, 7 percent compounded over 15 years is 275 percent cumulative.  Why pay extra for a cumulative guarantee that seems irrelevant?