Security Benefit Debuts New Fixed Index Annuity With Optional Guaranteed Income for Life
March 9, 2011 by N/A
TOPEKA, KS–(Marketwire – March 7, 2011) – Signaling a strong return to the retail annuity market place, Doug Wolff, President of the Retail Retirement unit at Security Benefit Life Insurance Company, today announced the company is launching Secure Income Annuity, a fixed index annuity. Secure Income Annuity is the result of a joint effort with two other local Topeka companies, Advisors Excel and Innovation Design Group, to create an exclusive product designed to help people reach their goals in retirement.
“We joined forces with Advisors Excel and Innovation Design Group, two well-respected Topeka-based companies, to build this product after getting to know their firms and the high caliber of financial advisors with whom they work,” said Wolff. “This annuity is designed for policyholders who intend to hold it for the long-term and who want their interest linked to the stock market without the risk of losing money in the stock market. It’s exciting to offer this product — which was created locally — across the nation.”
Policyholders have two types of crediting strategies in the annuity. The first is a fixed account that pays a guaranteed amount of interest each year. The second is two crediting strategies that are linked to the S&P 500®, excluding dividends. The S&P 500® index crediting strategies give the policyholder the ability to have the interest that is credited to their contract based on the positive movement in the index, up to a capped maximum amount of return, but if the index has a negative return in the contract year, the policyholders account value does not go down. Therefore the policyholder does not have downside risk in their account value.
Some of the basics of the annuity are that it can be bought by individuals up to the age of 80. It can be purchased through a traditional or Roth IRA, which works well for individuals wanting to rollover money from their 401(k) or other employer sponsored plan when they retire or separate from service. It also can be purchased with non-qualified dollars, meaning money not in an IRA or employer plan. The minimum purchase amount is $25,000 to get started.
Secure Income Annuity also has a bonus feature that gives the contract a credit to the policyholder’s account value for purchases made in the first year. For this annuity, the bonus is 8% for the base product and 10% when the Guaranteed Lifetime Withdrawal Benefit Rider (GLWB) is selected. In some states, the bonus is lower. The bonus does have a recapture schedule so the policyholder needs to be able to hold the annuity throughout the surrender charge period in order to avoid any portion of the bonus being recaptured.
“One of the exciting features of Secure Income Annuity is the optional Guaranteed Lifetime Withdrawal Benefit (GLWB) that can be selected at purchase. It provides a specified amount of income, which we call the Lifetime Annual Income, which the policyholder can take for the rest of his or her life, even if the account value is depleted,” said Jordan Canfield, Chief Executive Officer, Innovation Design Group.
The GLWB is designed so that, subject to certain conditions, the amount of Lifetime Annual Income that may be taken increases for each year the client defers taking income. For example, each year the policyholder waits to take income two things happen. First, the policyholder receives a roll-up to their GLWB Benefit Base of 8.2% compounded each year the policyholder defers taking income up to age 85 or 10 years, whichever comes first. The Benefit Base is used to calculate the amount of Lifetime Annual Income and the amount charged for the rider. Second, for each year the policyholder delays taking income, he/she also has their lifetime withdrawal percentage payout increase by 0.10%.
“The effect of the roll-up and the annual increase in the lifetime withdrawal percentage working together can have a significant impact on the amount of lifetime annual income the policyholder can take and can help people be better prepared for their retirement years,” said David Callanan, one of the founders of Advisors Excel.
It is important to note, however, a client taking more than their Lifetime Annual Income will reduce the amount of income under the rider going forward.
The GLWB Rider of Secure Income Annuity also offers the Home Healthcare Doubler. It allows policyholders to double their Lifetime Annual Income for a maximum of five years if they are unable to perform two of six basic activities of daily living set forth in the rider. There is a two-year waiting period to use this feature of the rider and a physician’s statement is required each of the five years a client wishes to use this rider feature. The physician must certify that the policyholder cannot perform at least two of six basic activities of daily living.
“It’s a nice benefit to have in case the unexpected happens in the policyholder’s life,” said Wolff. “Further, guaranteed lifetime withdrawal benefits are very popular for individuals near or in retirement and we believe the Secure Income Annuity is one of the most competitive in the industry. With the aging baby boom population entering into retirement this annuity may be a nice fit for retirees or those nearing retirement. This annuity has limitations and charges, so we encourage people to visit with their licensed insurance professional to determine whether it meets their insurance and financial objectives.”
Secure Income Annuity is issued by Security Benefit Life Insurance Company, One Security Benefit Place, Topeka, KS, 66636 and has a surrender charge, premium bonus, bonus recapture and market value adjustment. Bonus annuities may include lower cap rates, higher withdrawal charges or other limitations that are not found in annuities that don’t have a bonus feature. The Benefit Base is not an amount that may be withdrawn and not an amount payable on death. All guarantees are based on the claims paying ability of Security Benefit Life Insurance Company. The Security Benefit Secure Income Annuity (Form 5800 (11-10) and ICC10 5800 (11-10)), a fixed index flexible premium deferred annuity contract, is issued by Security Benefit Life Insurance Company. The Guaranteed Lifetime Withdrawal Rider (GLWB) (Form 5820 (11-10) and ICC10 5820 (11-10)), an optional rider available for purchase with the Security Benefit Secure Income Annuity, is issued by Security Benefit Life Insurance Company. Product features, limitations and availability may vary by state. “S&P 500®” is a trademark of Standard & Poor’s and has been licensed for use by Security Benefit Life Insurance Company. The Product is not sponsored, endorsed, sold or promoted by Standard & Poor’s and Standard & Poor’s makes no representation regarding the advisability of investing in the Product.
About Security Benefit
Security Benefit fosters strong partnerships to provide insightful and customized retirement solutions for employers and individual investors nationwide. Through a broad advisor network and its nationally recognized money managers, Security Benefit provides mutual funds, annuities, exchange traded funds, broad retirement plans and programs. As an industry leader in service technology, Security Benefit affiliates also offer business processing and broker/dealer solutions tailored to the financial services marketplace. For more information about us, visit www.securitybenefit.com.
Michel’ Philipp Cole
Jones Advisory Group