In fourth quarter 2009, 84% of variable annuity buyers chose to have guaranteed living benefit features added to their policies, according to a new annuity study.
That election rate is down slightly from the previous 4 quarters, when consumers elected GLBs at a rate of 89% or higher, says the report from LIMRA, Windsor, Conn.
The study reflects results from 26 annuity firms representing 95% of fourth quarter 2009 industry sales in which a GLB was elected, LIMRA says. The study covers 188 VA contracts offering a GLB.
The researchers attribute the dip in the GLB election rate to a decline in election of one type of GLB–the guaranteed living withdrawal rider.
However, they say, GLWB market share still remained high. In fourth quarter GLB elections, nearly 75% of sales premiums went into contracts in which a GLWB rider was elected, they say.
In the quarter, GLBs were elected in contracts representing $18.2 billion of new deferred VA premium, the researchers say.
Turning to year-end results, the researchers found that:
–GLWB asset growth outpaced the other types of living benefits. By year-end 2009, GLWB assets comprised nearly half of all VA assets with a GLB.
–VA assets with GLBs attached increased 41%, from $292 billion at the beginning of 2009 to $411 billion at year-end. Total VA assets increased 21% from $1.15 trillion to $1.39 trillion during the same period.
“Especially in this shaky economy, consumers are choosing security through GLBs,” sums up Dan Beatrice, senior analyst, LIMRA Retirement Research. “Despite companies’ efforts to de-risk benefit riders, lowering their comparative attractiveness, 80% of new VA sales premium during the year went into contracts in which a GLB was elected.”