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Portfolio > Asset Managers

LIMRA Survey: VA Buyers Overwhelmingly Favored a GLB Option in Third Quarter

By Warren S. Hersch

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Nearly 9 in 10 variable annuity buyers elected to purchase a guaranteed living benefit rider in the third quarter of 2011, according to a new report.

LIMRA, Windsor, Conn., published this finding in a summary of results from a Variable Annuity Guaranteed Living Benefit Election Tracking Survey that collects VA GLB sales, election rates and assets on a quarterly basis. The 23 survey participants represent 96% of third quarter 2011 industry sales in which a GLB was elected.

The survey reports that 88% of VA sales ($25.2 billion) included a GLB rider on products offering the rider ($28.7 billion in sales). Total VA sales in the third quarter were $31.5 billion.

VAs with a guaranteed withdrawal benefit (GLWB) rider comprised $294 billion of VA assets in the third quarter. This compares to $162 billion and $74 billion, respectively, for the guaranteed minimum income benefit (GMIB) rider and other riders (including the guaranteed minimum accumulation benefit (GMAB) and hybrid options).

In the second quarter of 2011, VA assets with a GMWB, GMIB and other riders totaled $315 billion, $176 billion and $84 billion, respectively.

The survey adds the GMIB election rate increased in the third quarter by 5 percentage points “largely at the expense of the GLWB election rate,” which dipped four percentage points in the third quarter. The GMAB election rate also declined one percentage point.

VA assets with a GLB rider dipped 8% during the quarter to $530 billion from $575 billion, the survey reports.

GLB election rates were at 91% in the bank and wirehouse channels, while the career channel continues to climb, growing one percentage point to reach 79% in the third quarter, the survey says.

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