The Decline and Fall of the Guaranteed Living Benefit in VAs
August 12, 2025 by Warren S. Hersch
Several industry dynamics are driving the shift. Peter Lamond, variable annuity product director at Wink, cited the capital strain imposed by guaranteed products. Carriers must hold more reserves to back living benefits compared to products without such features.
In addition, these guarantees require more expensive hedging strategies to manage risks tied to features such as guaranteed lifetime withdrawal benefits (GLWBs) and guaranteed minimum accumulation benefits (GMABs).
These products also carry profitability risk. In down markets, subaccount values fall, reducing fee income that supports the guarantees, Lamond noted.
He added that insurers are carefully managing how much GLB business they want on their books relative to the size of their total VA blocks. Meanwhile, more carriers are pushing sales of buffered annuities — also known as registered index-linked annuities or RILAs — siphoning demand from traditional variable products with guarantees.
“Pretty much all the big carriers have gone into that space,” Lamond said. “That seems to be taking away” business from conventional VAs with GLBs.
Read via Life Annuity Specialist
