Variable Annuity Living Benefits Explained
One of the major reasons living benefits have grown in popularity is because they reduce investor risk. The popularity is a direct result of poor market performance. Living benefits evolved because of this market decline and have made investing easier. As the market had its steady and severe decline in the early 2000's, insurance companies …
One of the major reasons living benefits have grown in popularity is because they reduce investor risk. The popularity is a direct result of poor market performance. Living benefits evolved because of this market decline and have made investing easier. As the market had its steady and severe decline in the early 2000's, insurance companies came up with a novel idea: why not guarantee investors a rate of return, regardless of market performance. The GMIB is the grand daddy of the living benefits. Other living benefits have been introduced since the first GMIB was released over 6 years ago. Now we have guaranteed minimum withdrawal benefits also known as GMB's, guaranteed account values known as GAV, and life-time benefits. Each one of these benefits may not be available at all insurance carriers and can go by different names. All these benefits deflect the risk of investing in the stock market and puts the risk on the insurance company. Of course, the insurance companies may make a profit from the fees you pay on these benefits. Lets take a look at the different benefits. GMIB: The terms of the guarantees seem pretty simple, you invest in the company's variable annuity for a specified number of years, typically 10 years. If the market does not perform well, the company guarantees you a minimum income stream for life, even if your account is at zero. The insurance company gives you a minimum interest rate for that 10 year period of time, usually 5 or 6%, which accumulates and is considered the "base benefit" amount. This base benefit amount is what is used to calculate the minimum stream of income that is guaranteed for the rest of your life. This benefit does require you to annuitize the contract. That means you turn in your contract for a stream of income, this option is irrevocable. The term used for this benefit is GMIB which stands for guaranteed minimum income benefit. Different companies use different terms for this benefit. GWB: The guaranteed withdrawal benefit was the second living benefit that hit the insurance market about 5 years ago. This benefit allows the owner of the contract to take withdrawals for a guaranteed minimum period of time. This type of benefit guarantees you your money back in the form of withdrawals. A withdrawal benefit usually allows you to take withdrawals in the amount of 6 to 12%. Typically, the benefits allow 7% on average and guarantees you that 7% for a minimum of 14.2 years, which equals 100% of your principal back. These benefits usually allow for step-ups every 3 to 5 years, and when you step-up the account value, assuming positive investment results, it restarts the 14.2 year time frame all over again. This benefit allows you to increase your income if your investments go up and guarantee your money back if you lose money in the market. Keep in mind you only get your money back in the form of withdrawals, it is not a lump sum benefit. http://www.xblcodesfree.net http://www.iferrari.net http://www.neuthemes.net http://www.6up024.com http://www.unknotted-living.com http://www.wangwenshuju.com http://www.radiopaisano.net http://www.dewalt-dw717.com http://www.theirmustbeaneasierway.com http://www.dfgbbhggg.com http://www.goldenpipes.net http://www.noscrit.net http://www.hathayogabeneficios.net http://www.furallefalle.net http://www.templte-help.com http://www.superbowl2017live-stream.net http://www.siberchaqt.net http://www.modelland-cards.com http://www.white-smoke.net http://www.anytimedesign.net http://www.polyphobia.net http://www.productsummary.net http://www.residencianuria-barcelona.com http://www.gilberthomes85233.com http://www.solantec.net http://www.ggobler.com http://www.wb1302.com http://www.wb1303.com http://www.c5g4icfv.com http://www.wb1306.com http://www.wb1305.com http://www.folsomimplantdentistry.com 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