Indexed annuities with living benefit features add a new and interesting element to the industry.
Variable annuity providers seem to have had a lock on the living benefit features for the past decade or so.
This is changing with the addition of living benefits to indexed products.
Security Benefit just released a couple of new indexed annuities--the Foundations 5 and Foundations 7 products.
Both products are indexed offerings.
The interesting feature, though, is the optional guaranteed lifetime withdrawal benefit that is available.
The Foundations GLWB provides an 8.5 percent per year (simple interest) benefit base roll-up for 15 years. In other words, the benefit base is guaranteed to increase at least 8.5 percent annually until you start taking withdrawals or reach age 85.
Account value step-ups in light of stronger market conditions apply if returns and credits are greater than the 8.5 percent.
In addition, the lifetime withdrawal rate that kicks-in when you do start taking GLWB payments is as high as 7 percent.
8.5 and 7 are pretty rich and interesting on a comparative basis. Not sure if there are any VA living benefits currently on the market with features this rich.
The 7 percent lifetime withdrawal rate is a maximum and the actual rate is based on the age at which you begin to take GLWB payments. The schedule is based on single or joint life, and is scaled starting at age 50 (4 percent for single and 3.5 for joint payments). GLWB caps at age 80+ at 7 percent (single) and 6.5 percent (joint life).
