Guranteed Income Rider in Deferred Annuity

[NJCFP]

Hello,

I'm a money manager starting out w/ annuities as part of our retirement planning.

I have two questions about deferred annuities:

1) I am looking for a fixed annuity product that can do two things a) grow the income base while b) receiving lifetime income benefit (triggering immediately). Is there a product that can do this, like some sort of a SPIA or DIA annuity?

2) Is there such a thing as a Lifetime Income Benefit in a SPIA or DIA *FIXED* annuity? It's my understanding that it's different from GWIB riders (which stop when money is depleted).

Who sells either of these?

Thank you
NJCFP

 

[DHK]

#1 - Not that I know of. With Fixed Indexed Annuities, the income base grows and then you take lifetime income via the rider provisions. However, once income has begun, the income base doesn't rise again. There might be a company that doesn't stop, but I wouldn't know which company that might be. Some LIBR may offer a COLA increasing income option. Personally, I'm not much of a fan of those, but that may just be me.

#2 - A SPIA already has a lifetime income benefit, unless specified for a period certain payout only.


A huge advantage of FIAs over VAs with GWIBs or LIBRs is that the costs against the cash balance is MUCH less. It's often a total cost of less than 1% against the cash balance for the optional rider... while VAs with M&E, portfolio management, and rider fees are around 3-3.5%

 

[scagnt83]

Hello,

I'm a money manager starting out w/ annuities as part of our retirement planning.

I have two questions about deferred annuities:

1) I am looking for a fixed annuity product that can do two things a) grow the income base while b) receiving lifetime income benefit (triggering immediately). Is there a product that can do this, like some sort of a SPIA or DIA annuity?

2) Is there such a thing as a Lifetime Income Benefit in a SPIA or DIA *FIXED* annuity? It's my understanding that it's different from GWIB riders (which stop when money is depleted).

Who sells either of these?

Thank you
NJCFP

There are a good many Fixed Deferred Indexed Annuities that offer what is called a "step up" to the income base while the Lifetime Income Benefit is triggered. There are probably 10 or 12 solid carriers to choose from... American General, National Western Life, Great American, American Equity, Allianz, North American, Midland National, American National, Athene, Lincoln Financial, Genworth. All of those are strong options to look at and I am fairly certain that all of them offer a step up in the Income Base.

For your second question, currently all DIAs pay a lifetime benefit. There are no "Period Certain" options in DIAs that I am aware of.
Most all SPIA carriers on the market offer a SPIA with a Lifetime Benefit. A few offer a separate Period Certain product. Some might just make them both options within a single product. I dont know of any carriers that offer a Period Certain SPIA and not a lifetime spia product.

You said: "It's my understanding that it's different from GWIB riders (which stop when money is depleted)." when referring to SPIAs

A SPIA has no income base like a GMWB Rider does. A Lifetime SPIA pays for life. There are different options such as ROP, 50% ROP, Period Certain Guaratnees, etc. But no matter what the payments last until the Annuitants are dead.

A GMWB Rider pays for life as well. It does not stop once the Income Base or the Surrender Value/Accumulation Value is depleted. It pays for the entire lifetime of the named recipient of the Rider Benefit. That is the whole point of the GMWB Rider... the client gets to guarantee a lifetime of income, but they also get to keep liquid access to their surrender value for at least 10-20 more years for a "just in case" type situation.

 

[DHK]

I'm sorry Scagnt83, but while I know I'm not up to speed on all the companies out there, I KNOW that American National allows the income base to step up UNTIL income is taken. Once income is taken, that income base/amount is frozen for the lifetime of the annuitant. Even if you stopped the income, the income base does not rise once income has been triggered.

Having the income base "step-up" while taking income, seems to me to be more of a Variable Annuity promise, depending on the performance of the underlying sub-accounts.

 

[scagnt83]

I'm sorry Scagnt83, but while I know I'm not up to speed on all the companies out there, I KNOW that American National allows the income base to step up UNTIL income is taken. Once income is taken, that income base/amount is frozen for the lifetime of the annuitant. Even if you stopped the income, the income base does not rise once income has been triggered.

Having the income base "step-up" while taking income, seems to me to be more of a Variable Annuity promise, depending on the performance of the underlying sub-accounts.

You are partially correct. I slightly misunderstood the OPs question at first. But there are still IA carriers out there that do this.

Great American has a Rider on the "Custom 10" product where the income base increases by the index credits once income has started.

Allianz has an option on the Riders on the Preferred IA products that does this as well.

I wouldnt be surprised if there are a couple of others that now do this too. But those two I know for a fact offer it.

 

[aclaro]

To add to the list Athene, American General, Guggenheim

Also, the old (original) GWB differed from GMIB in that the income would stop. Both of these were riders on VAs. Since then they have basically merged the two into the income riders today.

Are you looking for a step up based on performance?

 

[scagnt83]

To add to the list Athene, American General, Guggenheim

Are you sure about that? I know that Athene offers increases in income based on the CPI. But I am not aware if increases based on Index performance.

I am also very familiar with the AG products (granted I have never sold one of their Riders), and I have never seen anything about increases of the income (after income starts) based on the index performance.

I know nothing about Guggenheims IAs. I would not sell a carrier with that low of a rating for a lifetime product. jmo