GMIB Max V

Wondering if MetLife recognized the irony in naming their most currrent guaranteed minimum income benefit rider.

The most current version of Met's GMIB is referred to as Max V.  A more appropriate title would be Max IV but that title went to the previous iteration which actually had richer features than the Max V.

If this all sounds confusing, it is...  GMIB Max V is a living benefit feature that increases contract owners' benefit base by 4 percent each year and allows for 4 percent withdrawals.

For what it's worth, the enhanced death benefit also allows for a 4 percent annual increase.

The prior version of the GMIB (and GMDB) had a 5 percent rate.

Of course MetLife is not alone in dialing-down the rates associated with their guaranteed living benefits.  The entire industry has either been exiting the variable annuity business or significantly modifying their living benefit features.  

Low interest rates are the driver of these trends.  At a certain point, though, consumers and their financial advisors need to assess how much bang for the buck there is through these living benefit riders.  Consider, for example, that the 4 percent Max V GMIB is actually 3 percent in real terms when the 1 percent fee is deducted.

3 percent is not exactly a robust level of lifetime income and as many advisors point-out, maintaining a 3 percent systematic withdrawal is not entirely unrealistic even in our low interest rate environment.