MetLife launches first longevity annuity for individual clients' retirement accounts

Latest product comes as qualified longevity annuity contracts look for a place in retirement accounts

Jul 20, 2015 @ 11:09 am

By Trevor Hunnicutt

MetLife Inc. on Monday unveiled its first longevity annuity for individuals' retirement accounts, becoming the latest firm to seize on new rules allowing plan beneficiaries to use insurance products that defer income distributions far longer than usual.

The insurance giant tweaked its Guaranteed Income Builder, a deferred-income annuity, to make it available for individual retirement accounts as a “qualifying longevity annuity contract,” according to a statement from the company. MetLife made such a product available for employer-managed retirement plans, such as 401(k)s, in May.

QLACs are a variety of deferred-income annuity: Clients buy the contract now but don't receive an income stream until far in the future, as late as in the client's 80s.

Last year, the Treasury Department announced a rule on longevity annuities, encouraging retirees to protect themselves against the risk of outliving their retirement savings.

The rules permit participants in 401(k)s and IRAs to use up to 25% of their account balance, or $125,000 — whichever is less — to buy a qualifying longevity annuity. Money that goes into the contract are exempt from required minimum distribution rules that kick in at age 70.

A number of carriers have worked to meet that demand, including American International Group Inc., Lincoln National Corp. and Pacific Life Insurance Co.

Yet broker-dealers have been slow to adopt the products. Those firms have wrestled with questions over who ensures the contract applications meet federal guidelines. Like a number of other income-oriented investments, the products have also struggled against a backdrop of low interest rates.

Nonetheless, deferred-income annuity sales hit record levels last year at $2.7 billion, up 22% from 2013. That's still a small share of the $236 billion in annuities overall, according to LIMRA LOMA Secure Retirement Institute, a trade group.

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