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Hedgeness Inc. has come up with a new tool for comparing variable annuity contracts: a standardized expense-to-benefit ratio for variable annuity guaranteed lifetime withdrawal (GLWB) benefits riders.
Analysts from the Chicago-based data analytics services firm showed off their GLWB value indicator earlier this month, in a report comparing the value of the GLWB riders available with seven different VA contracts.
The analysts found that:
- The expense number for the GLWB rider with the highest expense number was 25% higher the number for the rider with cheapest expense number.
- The highest benefit value number was 38% higher than the lowest benefit value number.
- The highest expense-to-benefit ratio was 28% higher than the lowest expense-to-benefit ratio.
The GLWB rider expense ratios varied less than the benefit value number because riders with a higher benefit value numbers tended to have somewhat higher expense ratios than the riders with lower benefit value numbers.
A copy of the full report is available here.
Analysts at Hedgeness started by defining a hypothetical rider purchaser.
