The impact of guaranteed living benefits on sales of variable annuities is growing, a new survey by Milliman Inc. shows.
Milliman’s second annual guaranteed living benefits survey of leading VA carriers found 72% of VA buyers in the first half of 2006 picked GLBs when available, up from 68% in 2005 and 56% in 2004.
Milliman, Seattle, reports total sales of VAs that offered a GLB during the first half of 2006 constituted 89% of VA sales, up slightly from 87% in both 2005 and 2004.
VAs generally offers 3 types of GLBs. Average election rates of the guaranteed minimum withdrawal benefit and guaranteed lifetime withdrawal benefit increased from 24% in 2004 to 29% in 2005, and 35% during the first 6 months of 2006, relative to total VA sales.
“Guaranteed lifetime withdrawal benefits for life have become the ‘must have’ product feature in the current VA market,” Milliman says.
GMWB-GLWBs captured some of the market share from the guaranteed minimum income benefit, whose election rates fell from 24% in 2005 to 22% in the first 6 months of 2006.
Average election rates of the guaranteed minimum accumulation benefit remained stable over the 3 reporting periods at 7%.
The portion of VA sales in which no GLB was elected dropped from 44% during 2004 to 40% in 2005, and to 36% during the first half of 2006, Milliman says.