Deferred Variable Annuity – Rollup Rates
Deferred variable annuities with income guarantee riders generally support the ability to lock-in a guaranteed growth rate on the benefit base during the accumulation period before guaranteed...
View ArticleDeferred Variable Annuity – Rollup Rates: Part 2
How long does the guaranteed rollup rate last? Does it have any other features? How frequent are the step-ups to the benefit base? When are they applied? How does the rollup rate interact with step-ups?
View ArticleDistribution Period - Understanding Guaranteed Income From Deferred Variable...
The deferral period ends once guaranteed lifetime distributions commence. We have entered the distribution period. Guaranteed income will be set using an age-based guaranteed withdrawal or payout...
View ArticleWill A Higher Payout Rate Lead To More Guaranteed Income Of An Annuity?
When it comes time to begin taking guaranteed withdrawals, it is worthwhile to investigate whether applying the contract value of the annuity assets to a higher payout rate possibly available from...
View ArticleA Few Variable Annuity Nuances
Are there cases when the amount of guaranteed income can be decreased? What is the distinction between lifetime distributions and non-lifetime distributions? How are guarantees affected if a...
View ArticleVariable Annuity Death Benefits
The standard death benefit for a deferred variable annuity is the greater of the contract value of any remaining assets at death, or the total premiums paid less distributions received by death.
View ArticleHow Insurance Companies Manage Risks For The Income Guarantee
The insurance company must manage both longevity and market risk, as they are obligated to provide lifetime income payments at the guaranteed level if the underlying assets held within the annuity have...
View ArticleWhat Are The Fees Associated With The Variable Annuity?
While I discussed a variety of ways that insurance companies manage the risks around supporting lifetime income guarantees, fees are the headline mechanism for managing the guarantee risk. Fees can be...
View ArticleThe Problem With Variable Annuities – Are They Too Expensive?
Variable annuities have generally come under attack for the higher internal costs relative to an unprotected investment portfolio. But it is important to frame the issue of variable annuity fees in...
View ArticleIncome Guarantees, Risk Capacity, Upside Potential, And Asset Allocation
If one maintains the same asset allocation both inside and outside of the variable annuity, then the additional fees for a variable annuity can be expected to deplete the underlying value of the assets...
View ArticleMarketing Approaches For Income Guarantees
What approach can provide the most certainty to the retiree about guaranteed income while costing the least in terms of opportunity for upside growth? Companies tend to take a particular marketing...
View ArticleFixed Index Annuities: What Are They? How Are They Different?
Due diligence and a comparison with other annuity options is needed to make sure that the product is fairly priced and will behave in the way that the purchaser understands it to behave.
View ArticleCrediting Interest With An Annual Reset One-Year Term Point-To-Point...
Since FIAs are fixed annuities, crediting interest is the technical term for the returns generated by the contract value. As with variable annuities, it can be difficult to provide a standard...
View ArticleFixed Index Annuities - Interest Crediting Explained
With the chosen index, interest crediting will generally be based on a formula that can include floors, caps, participation rates, spreads, and, less commonly, buffers. To explain these basic features,...
View ArticleFIA Interest Crediting: Participation Rate & Index Cap Vs Interest Cap
A subtle detail that must be emphasized is whether the cap is an interest cap or an index cap. With an index cap, instead, the amount of the index gain realized is capped before then calculating the...
View ArticleFIA Interest Crediting: Adding A Spread; Monthly Sum; High Watermark And More
Another method for increasing the participation rate without introducing a cap is to add a spread to the FIA interest-crediting formula.
View ArticleFactors Affecting The Parameter Values For Fixed Index Annuities
Higher interest rates mean that principal can be protected with less assets, which then leaves more that can be devoted to the options budget used to purchase upside exposure.Participation rates can...
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