NY Advisors Offered First Fixed Annuity with Lifetime Withdrawal Benefit

Insurance agents and financial advisors with clients living in New York State thirsting for a fixed annuity with a guaranteed lifetime withdrawal benefit finally have one, courtesy of New York-based insurance giant AIG.

Assured Edge Income Builder-NY is the first fixed annuity with a guaranteed lifetime withdrawal benefit (GLWB) offered in the Empire State, the company said.

GLWBs, more commonly associated with variable annuities and indexed annuities, have turned up in fixed annuities more recently.

Assured Edge, offered by AIG subsidiary The United States Life Insurance Co., is sold through broker-dealers, banks, wirehouses and independent agents, AIG said.

As far as agents are concerned, perhaps the most interesting twist with Assured Edge Income Builder is the baked-in aspect of the GLWB.

Built-in riders mean owners don’t have to select a rider, and agents don’t need to talk about a separate rider “fee.”

Assured Edge Income Builder-NY comes with no rider fee.

In other states, the 0.95 percent charge for the GLWB is deducted from the contract value on each contract anniversary, AIG explained.

To use an automotive parallel, think of it as deducting the annual subscription to XM satellite radio from the value of a leased car.

Assured Edge, which comes with a seven-year withdrawal charge, was launched in other states before its New York debut due to state guidelines that required slight alternations in product design, AIG said.

Solving for Three Challenges

Assured Edge offers owners the flexibility to elect income immediately or in the future, giving the annuity characteristics found in single premium immediate annuities (SPIA), and qualities found in deferred income annuities (DIA).

The product brings “value and customizations, as well as security and flexibility” to retirement income strategies, said Bryan Pinsky, senior vice president of individual retirement at AIG.

Assured Edge solves for three challenges.

Annuity buyers want access to the assets within the annuity, guaranteed income for life and stable asset values, said Michael Treske, executive vice president and chief distribution officer for annuities and mutual funds at AIG.

“Assured Edge Income Builder does all this while also offering a rising income opportunity,” Treske said in a news release.

The initial income percentage used to calculate the guaranteed lifetime income amount automatically rises by 0.25 percent annually for up to 15 years, and a guaranteed interest rate protects owners from rate volatility, the company said.

The annuity, issued to owners 50 to 80 years old, is available in the form of single, joint, living trust and rollover IRA ownership types, AIG said.

Income Riders

Early last year, some insurers added income riders to fixed annuities to help agents sell more annuities in the face of Department of Labor rules that many advisors considered onerous and harmful to annuity sales.

While some portions of the rule took effect, the most punitive parts were delayed until July 2019. Still, annuity sales took a tumble and many industry experts blamed the turbulence surrounding the rule’s implementation.

Third-quarter fixed annuity sales fell 10 percent to $25 billion compared to the year-ago period, LIMRA reported.

Fixed annuity sales reached a record $117 billion in 2016, but are expected to remain flat to 5 percent down in 2017, LIMRA reported.

Fixed annuity sales are projected to rise by 5 to 10 percent in 2018 over 2017, LIMRA reported.

InsuranceNewsNet Senior Writer Cyril Tuohy has covered the financial services industry for more than 15 years. Cyril may be reached at [email protected]

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