Morningstar VA bulletin looks back at 2010, ahead to 2011

"More generous benefits" anticipated in 2011, according to Morningstar vice president Kevin Loffredi.

The Annuity Solutions division of Morningstar has published a report summarizing the variable annuity industry highlights of 2010 and predicting that “the pendulum [will] swing back toward more generous benefits during 2011” after the de-risking trend of 2009 and early 2010.

The report, “Continued Innovation Helps Fuel VA Sales in 2010,” also noted new filings of products not yet available:

  • Allianz filed a Lifetime GMWB with a guaranteed withdrawal percentage based not on age, but on the rate of a 10-year treasury note. This ties payouts directly to market performance, removing the age factor. The benefit has not been rolled out yet.
  • Lincoln National filed a new long-term care benefit that pays a monthly amount for long-term care expenses and costs 1.26% to 1.57%, depending on options chosen (fee calculation is complicated). This benefit pays for long-term care expenses up to three times the initial purchase amount (which must range from $50,000 to $400,000). Payments are offered monthly beginning after the first anniversary and are not taxable. The optional Growth feature gives the ability to increase the monthly maximum benefit amount using a calculation based on the investment growth and the remaining benefit base. The Growth option has a step-up feature through age 76. The benefit is capped at $800,000, covers a single life, and applies only to non-qualified assets.

© 2011 RIJ Publishing LLC. All rights reserved.