A life insurer is increasing the maximum potential growth rate on the asset base for a variable annuity guarantee program to 7%, from 6%.
AIG SunAmerica, Los Angeles, a unit of American International Group Inc., New York, is making a 7% “annual retirement income” bonus option available with its MarketLock For Life Plus guaranteed minimum withdrawal benefit.
The GMWB option has been increasing the guaranteed asset base 6% per year.
If purchasers choose the new 7% bonus option and wait to start taking withdrawals, the base used to compute withdrawals will increase at least 7% per year for the first 10 contract years.
If investment returns on contract assets are strong, the increases in the benefit base could be higher, AIG SunAmerica says.
Customers also can choose to stick with the old 6% increase option.
Customers who accept a 6% annual bonus increase can get GMWB protection with a “C-share” or “no withdrawal charge” feature, according to AIG SunAmerica.
To qualify for the guarantees, clients must follow AIG SunAmerica withdrawal rules and stick with program investment allocation guidelines.
AIG SunAmerica sells the guarantees and the underlying annuities through AIG SunAmerica Life Assurance Company in most of the country and through First SunAmerica Life Insurance Company in New York.
The insurance company units are responsible for backing the guarantees.
The 6% increase option is available for an annualized fee of 0.65% of the benefit base for the single-life version.
The 7% increase option is available for 0.75% of the benefit base for the single-life version.