There are a growing number of strategies an adviser can suggest: guaranteed minimum withdrawal benefits
(GMWBs), various annuity products, managed payout services--even an institutional platform offering competing providers’ annuities in the form of IRAs--among others.
The product offering includes deferred variable annuities, immediate fixed income annuities, fixed deferred annuities with guaranteed life withdrawal benefits
and deferred income annuities.
Some contracts allow the carrier to alter roll-up rates on guaranteed living withdrawal benefits
(GLWBs) based on the 10-year Treasury or the CBOE Volatility Index.
Consumers can also find the 2014 Weiss Ratings' lists of Best Variable Annuities with Guaranteed Withdrawal Benefits
and Worst Variable Annuities at WeissRatings.com (http://weissratings.com/ratings/best-and-worst-variable-annuities.aspx).
Consumers can also find the 2014 Weiss Ratings lists of Best Variable Annuities with Guaranteed Withdrawal Benefits
and Worst Variable Annuities at WeissRatings.com.
Annuities-all with some insurance component-include guaranteed fixed annuities, guaranteed minimum income benefits (GMIBs) and guaranteed minimum withdrawal benefits
When it comes to the feature that's helped seal the deal most often in the past year, an overwhelming majority of fixed indexed annuity (FIA) sales pros cite guaranteed lifetime withdrawal benefits
"The lower cost of hedging lets FIA carriers offer more compelling guaranteed living income and withdrawal benefits
to consumers," says Wolff, adding that most FIA buyers elect a GLB.
The IRS recently ruled that an annuity with guaranteed lifetime withdrawal benefits
("GLWB") covering the lives of the contract owner and a non-spouse beneficiary could be modified to eliminate the mandatory withdrawals that the non-spouse beneficiary would be subject to because of the owner's death, thus allowing the beneficiary to take advantage of guaranteed payments over his or her lifetime, rather than exhausting all annuity benefits within five years of the owner's death.
While only a few large companies dominate the business of providing guaranteed lifetime withdrawal benefits
or income benefits, other companies are reaching out to independent fee-based advisers with products that are viable in that distribution space.
According to Jeremy Alexander, CEO of Beacon Research, this is at least in part due to "the lifetime withdrawal benefits
offered by most indexed annuities." When living benefits were introduced on variable annuities, the idea was to protect the client's future retirement income from an untimely bear market.
The election rate on products that offer withdrawal benefits
increased to 56.6% in 2Q 2010, up from just 12.2% in 1Q 2008.