Part of the reason for variable annuities' increased popularity in the second quarter may be explained by the success of guaranteed living benefit riders. The riders generated $20.3 billion of new deferred variable annuity premium, up 18% from the first quarter, according to a report from LIMRA released Wednesday, September 1.
For the third consecutive quarter, guaranteed living benefit riders had an 87% election rate, according to the report. Election rates increased for the career distribution and bank channels (75% and 92%, respectively). The independent and wirehouse channels held steady at 90%.
Election rates for guaranteed lifetime withdrawal benefit riders were steady at 64% in the second quarter, while other riders had much lower election rates. Variable annuity purchasers elected guaranteed minimum income benefit riders 17% of the time, while guaranteed minimum accumulation benefit and guaranteed minimum withdrawal riders had 3% election rates.