2013 Annuity Product Update – First Quarter

by on Apr 16, 2013

Since the most recent installment of our quarterly Annuity Product Update, seven new products have been unveiled by Annuity Monitor firms and four new editions of pre-existing benefit riders were released. Compared to the fourth quarter of 2012 where only one new product was introduced, this is a significant increase in annuity product releases by our coverage firms. Here is a look at the products that were introduced over the last three months by the Annuity Monitor firms:

Allianz Life – Allianz 222 Fixed Indexed Annuity
The firm added the Allianz 222 annuity to its suite of fixed indexed annuity products in mid-February. In addition to tax deferral of interest credited, lifetime retirement income and beneficiary death benefits, the new product provides two ways to get a bonus to the Protected Income Value – 15% bonus on any premium in the first three years of the contract and interest bonus equal to 50% of any interest from allocations. Additionally, the new product offers two ways to receive income increases and two ways for beneficiaries to receive the death benefit – lump sum or payments over five years.

Aviva – TargetBenefit Fixed Indexed Annuity
Aviva introduced a new TargetBenefit annuity to its suite of fixed indexed annuity products in early March. The new annuity, also referred to as the TargetHorizon annuity (depending on the distribution channel) offers clients the choice of 10- or 15-year withdrawal periods with multiple interest-crediting strategies and two optional income riders that enable customers to choose between either a fixed lifetime income benefit or a slightly lower guarantee with the chance to participate in more market index upside potential. Each of the riders also provides a feature that triples the income payments in the event that the customer is admitted to a qualified care facility. Additionally, the products offer an innovative statement of benefits that provides a report of the monthly dollar amount the customer will receive when they start to receive guaranteed lifetime income, regardless of market fluctuations.

ING – ING Lifetime Income Annuity
The ING Lifetime Income Annuity is the newest addition to the firm’s suite of fixed annuity products. The new annuity offers customers an indexed minimum guaranteed withdrawal benefit and is available for one life or the life of two spouses. Additional product features include an optional death benefit with a maximum benefit amount up to 225% of the premium minus any withdrawals, surrender charge free withdrawals up to 10% of the account value each contract year and nursing home and terminal illness waivers.

MetLife – Guaranteed Minimum Benefit Max & Enhanced Death Benefit Max New Editions
On February 4th, MetLife launched new versions of the GMIB Max and DB Max optional benefit riders. The new versions of the popular benefit riders are similar in design to the previous versions; however, the riders will now both guarantee a 4% withdrawal and rollup rate as well as a new maximum issue age of 72 for the EDB Max V rider.

Pacific Life – Schwab Retirement Income Variable Annuity
Pacific Life added a new retirement income annuity that will be offered exclusively by Charles Schwab. Key features of the new Schwab Retirement Income Variable Annuity include an optional guaranteed lifetime withdrawal benefit (GLWB), no surrender charges, and a choice of three diversified Schwab exchange-traded funds (ETFs) portfolios.

Prudential – Defined Income Variable Annuity
Prudential introduced a new Defined Income annuity to its line of variable annuities in late February. Key features of the new Prudential Defined Income Variable Annuity include a total annual insurance charge of 1.90% for all years, a seven-year contingent deferred sales charge (CDSC) period, a 45-year issue age minimum and an initial minimum purchase payment of $25,000. Additionally, the annuity is allocated into the AST long duration bond portfolio.

Prudential – HD Lifetime Income and Spousal HD Lifetime Income New Editions
The firm unveiled new editions of the HD Lifetime Income and Spousal HD Lifetime Income optional living benefit riders (HD Lifetime Income v2.1 and Spousal HD Lifetime Income v2.1). The product features are similar to the previous 2.0 versions with the exception that both now offer the ability to capture the annuity’s highest daily value and grow that value at an annual 5% compounded rate until Lifetime Withdrawals begin, before 10 years; and after 10 years the Highest Daily Lifetime Income benefits continue to lock in the highest daily account value.

VALIC – AG Platinum Income Annuity
The new AG Platinum SPIA was introduced in late February and offers clients payments that start immediately, the option to receive payments on a monthly, quarterly, semiannually or annually basis and the option to direct the entire or partial payment to an alternate party such as a family member or charity. Additionally, the policyholder has a choice from several income payment options.

VALIC – Future Income Achiever Delayed-Income Annuity
The new Future Income Achiever single premium delayed income annuity provides clients with a variety of payout options including lifetime income only, lifetime income with certain period, lifetime income with installment refund, lifetime income with cash refund, period certain only and joint life. The new product also offers competitive income payments, a selection of income payment timeframes – monthly, quarterly, semiannually or annually – and a pre-commencement death benefit.

Year-to-Date Summary
Fixed annuities dominated the new product releases by Annuity Monitor firms in the first quarter of 2013. This trend has been ongoing since the beginning of 2012, as only two new variable products were released in 2012 compared to six fixed products and a new fixed index strategy product. Of the seven new annuities introduced to the market by our coverage firms during the first quarter of 2013, five can be classified as fixed products compared to only two variable products.