Firms are entering the variable annuity space with new product issues—are they crazy? Like a fox, some would say.
On Tuesday, Morningstar released its roundup of all things VA product-related for the first quarter of 2013, and it contained some surprises. The biggest, by far, was Forethought Financial’s foray into the market with a new VA issue.
“Forethought Financial issued its first variable annuity contract, the ForeRetirement VA (B-, C-, and L-shares),” Morningstar’s John McCarthy, product manager of annuity solutions, wrote in the report. “The fee for the B-share is 1.15%, which includes a 0.50% premium-based charge.”
The contract offers a lifetime guaranteed minimum withdrawal benefit with an age-banded withdrawal percentage (5% for a 65 year old; 4.5% in the joint-life version) and two types of step-ups: a highest anniversary (based on highest daily value) and a 6% fixed annual step-up for 10 years, he explained. The rider fee is 1.25%. There is also a second lifetime GMWB with similar withdrawal and step-up features and a highest anniversary (based on highest annual value) step-up for a fee of 1.05%.