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March 08, 2010 at 07:00 PM
Windsor, Conn. — The rate of election for guaranteed living benefits (GLBs, when offered in a variable annuity (VA), was 84% in the fourth quarter of 2009, according to LIMRA’s annuity study.
After four consecutive quarters at 89% or higher, overall election rates dipped because of a decline of the election of the guaranteed living withdrawal (GLWB) rider, although the GLWB market share remained high.
“Especially in this shaky economy, consumers are choosing security through GLBs,” says 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.”
GLBs were elected in contracts representing $18.2 billion of new deferred variable annuity (VA) premium in the fourth quarter.
When a GLB was elected in the fourth quarter of 2009, nearly three-quarters of sales premiums went into contracts in which a GLWB rider was elected. GLWB asset growth has outpaced the other types of living benefits and by the end of 2009 comprised nearly half of all VA assets with a GLB.
