Hartford unwraps VA buyout offer

Jan 20, 2013 @ 12:01 am

By Darla Mercado

The Hartford Financial Services Group Inc. has divulged the details of its variable annuity settlement program, which would give certain clients extra cash for dropping their contracts.

In a Dec. 28 filing with the Securities and Exchange Commission, Hartford spelled out the terms of its enhanced surrender value offer, which is available to legacy contract holders who also own the Lifetime Income Builder II benefit rider.

To be eligible, clients must not have annuitized their contract and can't be receiving lifetime- benefit payments from the income rider. The value of their contract can't be below a minimum contract value.

TERMS OF SURRENDER

Eligible customers who take the offer walk away from the variable annuity and any riders associated with it. These clients will get either the contract value on the full surrender date or the contract value plus 20% of the payment base, subject to a cap of 90% of the payment base.

Hartford will calculate the enhanced surrender value as of the valuation date after receiving the appropriate documents from the client.

The value of the contract could decrease between the time that clients are made the offer and when they decide to accept it, which could affect the enhanced surrender value that investors wind up collecting.

Rider charges, surrender fees and other costs won't be applied to contracts that are surrendered, but clients could face taxes if they cash out of the contract.

Contracts that are affected include the Director M and Hartford Leaders.

Hartford isn't the first insurer to make such an offer on legacy variable annuities.

Similar moves have been made by Axa Equitable Life Insurance Co. and Transamerica Life Insurance Co. Axa offered certain customers an increase in their account value in exchange for dropping their death benefits.

Executives at major broker-dealers report few customers' jumping at the Axa and Transamerica offers, but they predict that more clients will be eligible for Hartford's offer.

“It's a great option if you're on your deathbed, but if you're planning to live to 100, it can go either way,” said Zachary Parker, first vice president for income and distribution products at Securities America Inc.

dmercado@investmentnews.com Twitter: @darla_mercado

0
Comments

What do you think?

View comments

Recommended for you

Featured video

Events

The need for easier investment options.

Rob Barnett of Wilmington Trust makes the case for simpler investment choices for plan participants and sponsors.

Latest news & opinion

Why we must create a more diverse and sustainable financial planning profession

CEO explains how, why a firm should commit to conscious inclusion.

Pope Francis wants financial advisers to work like fiduciaries

Vatican bulletin admonishes advisers who act against the best interests of their clients.

Wells Fargo sees slowdown in advisers exiting this year

The 2016 banking scandal and public relations fiasco had alienated some of the firm's advisers.

States trying to save DOL fiduciary rule appeal rejection of effort to intervene

California, New York, Oregon ask for rehearing by full 5th Circuit Court of Appeals.

Employees at best places to work focus on the person — and the fun

Employees at best places to work firms focus on the person and fun.

X

Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting investmentnews.com? It'll help us continue to serve you.

Yes, show me how to whitelist investmentnews.com

Ad blocker detected. Please whitelist us or give premium a try.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print