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“We fine tuned our original Ovation GLWB, adding new competitive features that we believe clients will appreciate,” said
Features on the Ovation II GLWB rider include:
- Six percent compound benefit base enhancement, one of the highest in the industry among guaranteed minimum withdrawal benefits available on B Class, non-group, open contracts as of 3/31/2012, according to
Morningstar Annuity Research Center.
- The benefit base guarantee doubles the benefit base after 10 years or the client’s 70th birthday if no withdrawals have been taken.
- CustomChoice allocation allows advisors to assist clients in selecting their own investments – up to a 70% equity/30% fixed income portfolio. Election of the rider does require use of an approved allocation strategy.
- Increased withdrawal flexibility so clients can take withdrawals if needed without cancelling the six percent benefit base enhancement feature. If clients take a withdrawal in their contract’s initial years, they will not be eligible for an enhancement in that year. They will, however, retain their eligibility for future enhancements for up to 10 years from benefit purchase. All withdrawals reduce the contract value and benefit base. Withdrawals may be subject to deferred sales charges, and withdrawals before age 59½ may be subject to
IRSpenalties and income tax. Excess withdrawals may have a negative effect on the benefit’s guarantees.
- Investment options now available include a Minnesota Life selected group of more than 75 underlying investment options from 17 fund families which span variety of asset classes and, investment styles. This includes the TOPS™ Protected ETF Portfolios, which strive to provide more consistent returns through dynamic hedging, are one of the options that meet asset allocation requirements associated with Ovation Lifetime Income II. Although hedging provides a valuable strategy to help buffer against market downturns, it can limit upside growth potential.
The Ovation Lifetime Income II rider is available for an additional cost (1.20% on the greater of contract value or benefit base value). Clients need to consider many factors when considering selection of a GLWB benefits such as Ovation II. A benefit base enhancement feature, withdrawal percentages and investment options are factors to consider, along with the cost and limitations of the optional living benefit and the base variable annuity product.
One also should consider the mechanics behind a benefit’s guarantee, which generally include multiple features that may have a significant impact on a GLWB’s available guaranteed income. When clients consider Ovation II, advisors must be sure to address all of these features and their benefits and limitations in their analyses.
Ovation II establishes a benefit base for calculating guaranteed annual income. It provides no minimum contract value or investment return and is not available for withdrawal. Once elected the rider may not be cancelled. The optional rider is only available on certain contract types.
An annuity is intended to be a long-term, tax-deferred retirement vehicle. Earnings are taxable as ordinary income when distributed, and if withdrawn before age 59½, may be subject to a ten percent federal tax penalty. The tax deferral feature offers no additional value if the annuity funds an IRA or other tax-qualified plan. Annuities are not
There are charges and expenses associated with annuities, such as deferred sales charges for early withdrawals. Variable annuities have additional expenses such as mortality and expense risk, administrative charges, investment management fees and rider fees. They are subject to market fluctuation, investment risk and loss of principal. Guarantees are backed by the financial strength and claims-paying ability of the issuing company. The guarantees have no bearing on the performance of the variable investment options. Diversification is a method used to manage risk. It does not guarantee against loss.
Variable annuities are sold by prospectus. You may obtain a copy of the prospectus from your representative or from
Insurance products are issued by
DOFU – 05-2012
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