Variable Annuities: What's In and What's Out

Solutions that offer various features that are tailorable to a customer's circumstance are highly valuable, and customers want flexibility to add income riders or accelerate benefits when a medical event happens.

When these features are tied to a variable annuity, customers get tax-deferred growth potential.

Furthermore, product features and riders allow for flexibility when major life events happen, such as a client or their spouse becoming unemployed, being confined to a nursing home, or being diagnosed with a terminal illness.

These features are more desirable as they contribute to a client's confidence knowing they have options to access their contract value when the unexpected happens.

What's Out: Guaranteed Minimum Income Benefits (GMIB)

Most clients like to have control over their retirement accounts.

With GMIBs, clients are able to generate a lifetime income stream, by annuitizing the rider.

This limits their options if they need to surrender their contract and can affect their ability to leave a death benefit to loved ones.

Most advisors and clients are leaning toward a guaranteed lifetime withdrawal benefit (GLWB), which is different than a GMIB in that it allows clients to surrender their contract after they have started receiving income.

It will also pay a death benefit to beneficiaries upon death if there are funds left in the contract value.

What's In: Flexibility on How and When Clients Take Income

While products like variable annuities can provide guaranteed lifetime income, sometimes, clients don't always need to take the same amount each year.