Equitable, Lincoln and Security Benefit Add Products for Stability Seekers

Big life and annuity issuers, and some smaller players, are breaking through the financial services sector’s stunned silence with talk about products that offer strong value guarantees.

The COVID-19 pandemic has eased, and the stock market has overcome most of the volatility that hit in the fall.

But many clients, and their advisors, are still clinging to stability.

Survey figures from LIMRA show that sales of individual fixed annuities soared 110% year-over-year in the fourth quarter of 2022, to $65 billion, as sales of variable annuities plunged 30%, to about $23 billion.

Many life insurers have talked in recent years about reducing their exposure to investment-related risk by backing away from benefit guarantees, but the new products and product features making news are designed to protect clients from a new wave of volatility.

Here is the latest news in three types of volatility-taming products.

1. Non-Variable Indexed Annuities

Security Benefit has spruced up products that include built-in account value protection: its Strategic Growth Series of annuities.

The products are single-premium, deferred, non-variable indexed annuity contracts.

The products tie a client’s crediting rate to the performance of an investment index. Strong investment index performance can increase a client’s crediting rate above the minimum guaranteed level, but the crediting rate cannot fall below the guaranteed level.

One change is the addition of a product with a seven-year surrender charge schedule. The surrender charge period is shorter than the period for other products in the family, and that could soothe clients who fear what might happen if they lock up too much of their money for too long.

Another change is the addition of a rate buy-up option that can help contract holders lock in new, higher rates by increasing the share of investment index gains that flows into the client’s own annuity crediting rate.

Yet another change is the addition of two investment indexes that may help moderate the effects of U.S. stock market volatility, by tying a portion of the returns to assets such as commodities and non-U.S. stocks.

2. Cash-Value Life Insurance

Like a non-variable annuity, cash-value life insurance products such as whole life, indexed universal life and variable universal life offer a client a chance to use investment market against to improve product performance, while protecting the client against investment-market-related loss of value.

The products can protect beneficiaries against the risk of the insured’s death. The insured can also use borrowing strategies to draw cash from a cash-value policy and make the policy perform many of the functions that an annuity performs.