VA carriers kill some living benefits, raise fees

Carriers, including Lincoln National Corp and Jackson National Life Insurance Co., ended 2010 with a handful of replacements on variable annuity living benefits, while others increased fees. Five living benefit contracts and a variable annuity were scrapped during the fourth quarter of 2010, according to a study from Ernst & Young LLP's retirement income knowledge bank. Last year, Jackson closed its LifeGuard Freedom 6, while Lincoln closed out its Lifetime Income Advantage and its i4Life Advantage with Guaranteed Income Benefits feature, Version 3. Sun Life Financial Inc. eliminated a withdrawal benefit, its Sun Income Riser benefit. Meanwhile, Minnesota Life Insurance Co. ceased sales of its MultiOption Advisor C class variable annuity. Carriers closed down the features as they prepared to make room for new living benefits. During the fourth quarter, Lincoln rolled out the fourth version of i4Life Advantage, while Jackson released its LifeGuard Freedom Flex. Sun Life was another carrier with new products, rolling out Sun Income Riser III, in addition to its Income Maximizer and Income Maximizer Plus benefits. Fees also climbed for some issuers, including Guardian Life Insurance Co., which increased charges for its Guardian Target Now, 200 and 300 withdrawal benefits. Benefits on Guardian Target Now currently costs 0.80%, up form 0.65%, while the 200 variety costs 1.10%, reflecting a 15 basis point increase. Guardian Target 300 rose to 1.35% from 1.20%, according to the study. Pacific Life increased fees by 20 basis points for its Guaranteed Protection Advantage 5 accumulation benefit to 0.75% of contract value, while RiverSource Life Insurance Co. raised fees from 1.10% or 1.25% — depending on the type of contract — to 1.50% of the contract value or the minimum contract accumulation value, which ever is greater, according to Ernst and Young. Contract changes aside, the top five sellers in the VA space have remained largely the same, according to LIMRA. Prudential Financial Inc. and MetLife Inc. continue to hold the number one and two places, respectively, while Jackson and TIAA-CREF came in at No.3 and No.4, swapping positions from 2009. Lincoln continues to hold fifth place, where it was in 2009. Meanwhile American International Group Inc. is in sixth place among VA sellers, a leap from tenth in 2009.