Jackson National Life Insurance Company has created a guaranteed minimum withdrawal benefit for its variable annuities that allows the contract holder to increase–or “gross up”– the available withdrawal amounts to generate more income.

Called LifeGuard Freedom 6 Net, the GMWB is an extra-charge option in Jackson’s Perspective family of variable annuities, says Jackson National, Lansing, Mich., an indirect subsidiary of Prudential P.L.C., London.

According to the prospectus for the Perspective II VA, the new GMWB guarantees withdrawals of a minimum annual amount for the life of the owner. But it may offer a higher level of guarantee and greater access to earnings for income purposes when the contract performs well, without negatively impacting the guarantees.

The company says the key features include:

- The GMWB enables contract owners to lock in gains to their guaranteed withdrawal balance every year if their contract value increases by an amount that exceeds premium payments adjusted for withdrawals.

- For at least the first 10 contract years in which no withdrawals are taken, a 6% annual bonus may be applied to the guaranteed withdrawal balance. According to the Perspective II prospectus, the purpose of the bonus is to incentivize policyholders to defer taking withdrawals. Hence, any withdrawal taken during the bonus period will cause the bonus not to be applied that year, the prospectus says.

- When it’s time to take withdrawals, the policyholder can lock in guaranteed lifetime income at age 59 1/2 , the company says.

- Contract holders may also withdraw 4% to 7%, depending on age at the time of first withdrawal, of their guaranteed withdrawal balance every year for life, the company says.

- If there are earnings in the VA, policyholders may “gross up” their withdrawals to cover all or a portion of their tax liability related to withdrawing those earnings, the company indicates. This should allow owners to compensate for a potentially greater tax burden, net the same after-tax withdrawal amount every year, and arrange a better plan for retirement, regardless of market conditions, the insurer says.

Guarantees are backed by the claims-paying ability of Jackson National Life Insurance Company and do not apply to the principal amount or investment performance of the separate account or its underlying investments, the company says.