What workers really think of their employers' health and retirement plans.
By Cyril Tuohy
Nationwide has announced the release of a suite of living benefit riders for its Destination Series 2.0 variable annuity, a move that will offer advisors more flexibility with regard to the company’s Destination-branded variable annuity.
Included in this latest suite are the Lifetime Income Rider, designed for investors at or near retirement who are looking for a guaranteed level of income; the Lifetime Income Capture, designed for investors with a longer time horizon, and Lifetime Income Track, a “value” option offering annuitants exposure to growth but at a lower cost, the company said.
Eric Henderson, Nationwide senior vice president for life insurance and annuities, said the goal of new riders is to give advisors options to present to their clients, knowing that a one-size-fits-all approach often falls short of needs.
Three living-benefit options allow advisors to tailor solutions to match the income replacement needs of retirees and preretirees, many of whom have expressed interest in products that guarantee an income base to supplement Social Security.
“By offering multiple living benefit riders, we not only provide more choice for advisors and their clients, we also diversify our risk provide, which supports enhanced capacity for our business and sets the stage for further growth,” he said in a news release.
Living benefit riders have gained in popularity. For example, life insurance companies have added long-term care and disability income riders onto life insurance policies. Annuity companies have added income riders to their annuity “chassis.”
Riders come at extra cost and offer features like higher interest rates – under certain conditions – and “step-up” clauses which lock in rates of income depending on the performance of investment selections within annuity contracts.
As more annuity carriers offer benefits, they are also looking to find ways to grow the market at a time when variable annuity sales are generally stagnant.
Variable annuity sales in the third quarter were $35.1 billion, down 3.3 percent from the third quarter in 2012, and down 5.9 percent from the second quarter last year, according to Morningstar. Assets values within annuities, however, have surged due to rising interest rates and a stellar return of the Standard & Poor’s 500 index.
Despite lackluster sales, “We’re seeing strong demand for all stripes of variable annuity products, both with and without income guarantees,” Frank O’Connor, Morningstar Annuity Intelligence product manager, said in a release last month.
Cyril Tuohy is a writer based in Pennsylvania. He has covered the financial services industry for more than 15 years. Cyril may be reached at email@example.com.
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