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Insurers Need to Give Retirement Savers What They Want: Bill Lowe

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Back in early 2012, Bill Lowe was out promoting a new Sammons Retirement Solutions variable annuity contract designed for the shaky financial world left after the horrors of the 2007-2009 Great Recession.

Sammons’ LiveWell Variable Annuity contract came with no option for the consumer to buy a guaranteed lifetime income, or any other rider. Lowe told a reporter in 2012 that the product was designed and priced for sustainable in a low-interest-rate environment.

(Related: Guaranteed Lifetime Withdrawal Benefits)

Today, Lowe is marketing a different kind of product: the new LiveWell Freedom Variable Annuity contract.

That product comes with a guaranteed lifetime withdrawal benefit (GWLB) rider.

An annuity purchaser can get a 2% minimum gain, and a 75% share of S&P 500 Index gains, up until the point the GLWB doubles.

The product also comes with a new feature: a freedom date. When an annuity holder reaches the freedom date, the holder can stop paying GLWB charges and get full access to the annuity’s accumulation value, Sammons says.

Here are three things Lowe said about the annuity market recently, in an interview.

1. Variable annuity sales have not fallen as much as they have because the retirement services market disappeared.

Lowe said he thinks variable annuity sales fell mainly because of all the cuts in benefits and increases in prices issuers imposed in the wake of the Great Recession.

“The demand is still there,” Lowe said. “The products just really didn’t meet the demands of the customers.”

One thing consumer want is a meaningful chance to share in the gains if the market goes up, Lowe said.

2. Adding a variable annuity contract with guarantees is different from offering an investment-only variable annuity (IOVA) contract.

Getting a contract with guarantees through the regulatory approval process is much more difficult than getting an IOVA contract through the approval process, Lowe said.

But consumers, and financial professionals, like annuity contracts that offer guarantees, Lowe said.

Because the new Sammons contract offers guarantees, “this is getting a lot more people looking at it,” Lowe said. “This is a different animal.”

3. Vanilla can hold costs down.

Lowe said Sammons is able to offer benefits guarantees with the new annuity, and a meaningful chance for the annuity holder to share in S&P 500 Index gains, by keeping some other characteristics of the annuity simple.

“We had to be thoughtful about the investment options,” Lowe said.

Limiting the size of the investment option menu helps Midland National, the Sammons affiliate writing  the annuity, manage risk, Lowe said.

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