Annuity Product Trends For 2012
EIA sales have greatly benefited from 3 innovations: bonuses (percentage of initial premium purchase), GLWBs, and GMDBs (enhanced withdrawal or death benefit). These 3 factors provide a strong incentive for 1035 exchanges. Less-used innovations include: income account/benefit base bonuses (money added to the amount from which future guaranteed lifetime income withdrawals are made), a bonus vesting schedule (lowers insurer’s cost and provides an incentive for investor to hold the contract), persistency bonuses (reward contract owners for keeping their contract), and annuitization bonuses (reward owners annuitizing their contracts).
Here are some additional examples of product innovations and trends with annuities in general: [1] dual-sleeve guaranteed withdrawal structures (AXA, Allianz), [2] percentage and step-ups tied to U.S. Treasury rates (AXA, Allianz), [3] step-ups during the withdrawal phase (SunLife), [4] guarantee tied to account value and increasing withdrawal percentage (Protective), [5] long-term care rider (Lincoln), [6] VIX-based fee structure on a withdrawal benefit (SunAmerica), [7] O shares (Pru, SunLife, SunAmerica), and [8] fee-based I shares (various insurers).