Jackson Adds Lifetime Income Benefit to RILA Family

If a client buys the +Income benefit and defers withdrawals, and the investment indexes chosen rise, a “step up provision” can increase the guaranteed withdrawal balance used to calculate the guaranteed annual withdrawal amount.

In a year when the contract value rises to be higher than the guaranteed withdrawal balance, the contract value will become the new guaranteed withdrawal balance.

The impact: For a client who is 65 when withdrawals begin and starts taking the withdrawals immediately, the guaranteed annual withdrawal amount percentage might be 4.25% of the guaranteed withdrawal balance, according to an income benefit effect illustration.

If the same client waits until age 74 to begin taking withdrawals, with a deferral period of nine years, the guaranteed annual withdrawal amount percentage would be 7.75%.

The disclaimers: Jackson notes in the income benefit announcement that RILAs are long-term insurance contracts designed for retirement.

“They are subject to investment risk, the value will fluctuate, and loss of principal is possible,” Jackson says.

Jackson also points out that limits on the amount of loss protection clients buy and caps on clients’ ability to participate in investment index increases could affect the annuity contract value.

Credit: Diego M. Radzinschi/ALM