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Life Health > Annuities > Variable Annuities

Jackson Adds Lifetime Income Benefit to RILA Family

By Allison Bell

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Jackson is adding a flexible retirement income spigot for its Market Link Pro family of registered index-linked annuities.

The new optional +Income lifetime income benefit can let a client choose whether to pull cash from a RILA contract, through a guaranteed annual withdrawal amount, immediately or after a deferral period.

The longer the client waits to begin taking withdrawals, the higher the guaranteed withdrawal amount percentage will be, Jackson says.

What it means: Relatively high interest rates and growing RILA market competition may boost RILA benefit design creativity.

The Jackson income benefit: Jackson introduced its RILA contracts in 2021.

Like other RILA contracts, the Jackson RILA contracts are variable annuities that are registered with the U.S. Securities and Exchange Commission.

For a traditional variable annuity, the crediting rate, or interest rate, depends on the performance of mutual fund-like investment funds.

For a RILA, the crediting rate depends on the performance of one or more indexes.

The Jackson annuities come with a menu of five different investment indexes.

If a client buys the +Income benefit and defers withdrawals, and the investment indexes chosen rise, a “step up provision” can increase the guaranteed withdrawal balance used to calculate the guaranteed annual withdrawal amount.

In a year when the contract value rises to be higher than the guaranteed withdrawal balance, the contract value will become the new guaranteed withdrawal balance.

The impact: For a client who is 65 when withdrawals begin and starts taking the withdrawals immediately, the guaranteed annual withdrawal amount percentage might be 5.75% of the guaranteed withdrawal balance, according to an income benefit effect illustration.

If the same client waits until age 74 to begin taking withdrawals, with a deferral period of nine years, the guaranteed annual withdrawal amount percentage would be 7.75%.

The disclaimers: Jackson notes in the income benefit announcement that RILAs are long-term insurance contracts designed for retirement.

“They are subject to investment risk, the value will fluctuate, and loss of principal is possible,” Jackson says.

Jackson also points out that limits on the amount of loss protection clients buy and caps on clients’ ability to participate in investment index increases could affect the annuity contract value.

Correction: The initial GAWA annual percentage was described incorrectly in an earlier version of this article. The correct percentage is 5.75%. 

Credit: Diego M. Radzinschi/ALM

Allison Bell

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