The Hartford Financial Services Group Inc. has introduced a variable annuity that allows clients to allocate dollars into a built-in income component.
The Hartford Financial Services Group Inc. has introduced a variable annuity that allows clients to allocate dollars into a built-in income component.
The Personal Retirement Manager provides clients with an investment portion that allows for growth through more than 50 different investment options.
However, the income component, dubbed the Personal Pension Account, is separate from the growth portion of the annuity and it can be funded independently. This way, the product acts like a variable annuity with built-in income, rather than the traditional combination of an annuity with an income rider, said John Diehl, senior vice president of business development at The Hartford.
“The difference between this product and the last generation of variable annuities is that, in the past, the income was really determined by the amount of money you chose to invest in the investment account; the income was a byproduct of the investment,” he said.
“In this case, if you want to target a certain amount of income, you can either fund it upfront or build it over time,” Mr. Diehl added. “Funds that don’t go toward income can be invested and grow toward the future.”
Clients are able to add money into their income account at any time, and since the contract covers both the investment and income components, they can sweep market gains into the Personal Pension Account, Mr. Diehl said. Dollars in that account are backed by The Hartford, he added.
The income component, which is separate from the investment side, also carries its own return-of-premium death benefit.
For an additional cost of 0.30%, clients can also add a return-of-premium death benefit to cover the investment component. However, in that case, a set of investment restrictions would apply.
The new product also signals a change in The Hartford’s attitude toward VA risk taking.
“Is there a different way we can still deliver the core value of what clients are looking for in a variable annuity — that lifetime income benefit — but do it more efficiently by using the construct of the Personal Pension Account?” Mr. Diehl asked.
“The risk paradigm really shifts from managing market risk to managing mortality risk, and when we think about what life insurers are best at, managing mortality risk is core to what they do,” he said.
