John Hancock Life Insurance Co will suspend sales of all AnnuityNote Portfolios variable annuity contracts, effective April 29.
The announcement, in a Securities and Exchange Commission filing, was made nearly two years after John Hancock had launched the simplified variable annuity. Clients were able to select from 11 subaccount options made up of the John Hancock Trust Lifestyle Portfolios or the actively managed asset allocation portfolios.
The product came in three share classes: A, C and advisory.
What made the product simple was that the AnnuityNote's income feature was baked into the annuity itself. Normally, customers have to buy lifetime benefit features separately from the variable annuity chassis. After five years of holding an AnnuityNote, clients would be permitted to take 5% annual lifetime withdrawals based on either the total amount invested or the contract's value on the fifth anniversary, whichever is higher.
However, the product met a lukewarm reception from financial advisers, who felt that the annuity's limited investment menu dampened their potential performance.
Lack of market demand is the reason why John Hancock is closing AnnuityNote, said spokeswoman Beth McGoldrick.
In the meantime, John Hancock will focus on its other annuity products: the Venture variable annuity, its market-value-adjusted fixed annuity and the John Hancock Essential Income fixed-immediate annuity.
New living benefits have already been filed with the SEC for Venture, expected to be effective June 1, according to John McCarthy, product manager of advisor software and annuity solutions at Morningstar Inc. So far, the features appear to include a 5% withdrawal rate after 65 and the opportunity to increase the benefit base either through an annual step-up or through crediting 5% simple interest annually to the client's purchase payments over the course of 10 years if there are no withdrawals. That growth rate rises to 6% at age 65.
“It's a swing toward more generous,” Mr. McCarthy said of John Hancock's product filing. “They might be starting to get more competitive.”
