Morningstar Advisor - Spring 2007 - 68

By the Numbers: VAs Guaranteed Living Benefits Find Traction in Market Once sold primarily as accumulation instruments, deferred variable annuities are now being marketed as income vehicles, too. While the concept of annuitizing assets has not gained much traction, the message of earnings potential, downside protection, and income generation—all qualities uniquely offered through guaranteed living benefits in variable annuities—has resonated with some investors. The appeal of living benefits is apparent in this data table of the most popular VAs. Forty-four of the top 50 variable annuities sold in the retail market offer a guaranteed minimum withdrawal benefit, with many also offering guaranteed accumulation and/or income benefits. Note the frequency with which a growthoriented fund of funds contains the largest percentage of total assets invested in the contract. John Hancock Trust Lifestyle Growth Series II, AXA Premier VIP Moderate-Plus Allocation B, and Metlife Investors Series Trust Metlife Growth Strategies Portfolio B are all examples of fund-of-funds investment options that must be selected and maintained in order to elect and exercise a living benefit. In all three instances these are the most aggressive elections allowed, which isn’t a surprise in light of the guarantee. Ameriprise and Pacific Life also require specific asset allocations with their living benefits, but use model portfolios as opposed to funds of funds. Although living benefit riders can push total annual fees in a variable annuity to 3%, some investors apparently find value in the security of a guarantee against market losses. Frank O’Connor is manager of Morningstar’s variable annuity software applications. Sales Rank Contract Name 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 John Hancock Life Insurance Co (USA) Venture III IDS Life Insurance Company Retr. Advisor Advantage Plus Jackson Natl Life Insurance Co Perspective II Pacific Life Insurance Company Innovations Select AXA Equitable Life Insurance Co Accumulator Elite 2004 AXA Equitable Life Insurance Co Accumulator Plus 2004 Pacific Life Insurance Company Value MetLife Investors Insurance Company MetLife Investors Class XC Hartford Life Insurance Company Leaders AXA Equitable Life Insurance Co Accumulator 2004 Hartford Life Insurance Company Leaders Outlook Hartford Life Insurance Company Director M American Skandia Life Assur APEX II American Skandia Life Assur XTra Credit Six ING USA Annuity and Life Insurance Co GoldenSelect PREMIUM PLUS Pacific Life Insurance Company Pacific Portfolios ING USA Annuity and Life Insurance Co GoldenSelect Landmark Lincoln National Life Insurance Company American Legacy III View John Hancock Life Insurance Co (USA) Venture ING USA Annuity and Life Insurance Co GoldenSelect ES II Jackson Natl Life Insurance Co Perspective L Series Lincoln National Life Insurance Company American Legacy III Hartford Life Insurance Company Director M Outlook Pruco Life Insurance Strategic Partners One 3 MetLife Investors Insurance Company MetLife Investors Class L Lincoln National Life Insurance Company Am. Leg. Shareholder’s Advan. Lincoln National Life Insurance Company ChoicePlus Assur. (L Share) Allianz Life Ins Co of North America High Five Nationwide Life Insurance Co BOA - Achiever Fidelity Investments Life Ins Personal Retirement John Hancock Life Insurance Co (USA) Venture Vantage AIG SunAmerica Life Assurance Company Polaris Choice II IDS Life Insurance Company Retr. Advisor Select Plus Hartford Life Insurance Company Leaders Plus Thrivent Financial For Lutherans Thrivent - Flexible Prem. DVA (New) Genworth Life and Annuity Insurance Co. RetireReady Choice AIG SunAmerica Life Assurance Company Polaris II Nationwide Life Insurance Co BOA - All American Gold AIG SunAmerica Life Assurance Company Polaris II A-Class Allianz Life Ins Co of North America Alterity Nationwide Life Insurance Co BOA - America’s Future II Lincoln National Life Insurance Company Multi-Fund Lincoln National Life Insurance Company ChoicePlus Assur. (B Share) New England Life Insurance Co American Forerunner Series American Skandia Life Assur Advisors Plan III Sun Life Assurance Co of Canada (US) Masters Flex Massachusetts Mutual Life Insurance Transitions Select Peoples Benefit Life Insurance Vanguard VA American Skandia Life Assur LifeVest II MetLife Investors Insurance Company MetLife Investors Class VA Data as of December 31, 2006 GMWB Guaranteed Minimum Withdrawal Benefit GMIB Guaranteed Minimum Income Benefit 68 Morningstar Advisor Spring 2007
Morningstar Advisor - Spring 2007

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