![]() ![]() In an email to RIJ, New York Life described the logic behind IndexFlex. Annual expense ratios of the variable subaccounts range from 0.37% to 1.06%. The annual mortality and expense risk (M&E) charges (usually how an annuity issuer recovers the commission it paid the agent or adviser) are 1.30%, 1.25% and 1.20%, respectively. The product has three surrender periods-a five-year, six-year, and seven-year term-with first-year surrender charges of 8%. Either way, they can’t lose money if they leave their money in the product for the length of the term. With the flat rate, investors earn exactly 3%, for example, whenever the index shows positive performance. With the capped rate, investors earn the return of the index (the S&P 500 or Russell 1000) up to, for example, 3.5%. Within the index-linked option, policyholders can choose a crediting method with either a “capped rate” or a “flat rate,” aka performance trigger. “The policies offer fewer variable investment options, and fewer optional riders and other features than certain of New York Life’s other variable annuities.” The product offer a limited form of one-stop shopping, “The policies are designed for individuals who want the ability to hold variable funds, index-linked investments and a traditional fixed account in the same contract,” the prospectus says. But the low-yield environment may be giving it no choice but to turn, like so many other life insurers, to options on equity indexes as a source of yield. The product would fits its image and culture like a rodeo bronc at a riding academy. New York Life executives have considered but, until now, always refrained from issuing an FIA. For retirees, the VA value proposition-guaranteed income for life without sacrificing liquidity-still makes a lot of sense. But VAs are still the only vehicle where investors can put almost unlimited amounts of after-tax money for liquid, long-term tax-deferred growth. These companies are bringing their very different VAs to market at a time when sales of the category, aside from registered index-linked VAs (RILAs) have trended downward for several years. “With fixed interest rates as low as they are, and variable annuity sales waning, these companies don’t have a choice but to develop an indexed offering.” “As soon as I read the filing for IndexFlex, my jaw dropped,” said Sheryl Moore, CEO of Wink, the annuity marketing and data service. It’s a bit of a surprise that New York Life decided to dabble in index-linked products, but desperate (low interest) times evidently call for innovation. The hybrid product gives contract owners three risk/return possibilities: fund-like variable subaccounts, a fixed account, an index-linked account. ![]() New York Life’s IndexFlex VA includes the firm’s first index-linked annuity. Schwab’s Genesis VA has an income benefit, for instance, and will be distributed by Schwab advisers and independent RIAs (registered investment advisors). But they’re approaching the product category from very different angles. New York Life is America’s most venerable mutual life insurer, and the top seller of fixed-rate annuities in the US in 2020.īoth are welcoming in the new year with new variable annuity contracts. Schwab is a publicly held direct-to-consumer all-purpose financial services platform. Our insights into the retirement market can help cultivate more effective client conversations and allow individuals to retire with confidence.įollow us if you are a financial professional and want the latest in thought leadership, product news, retirement planning perspectives and tips for growing your business.New York Life and Charles Schwab have little in common. Whether it’s guaranteed income, a lifetime paycheck or growth with protection, New York Life Insurance and Annuity Corporation, a subsidiary of New York Life Insurance Company, offers a suite of solutions designed to help financial professionals create a successful retirement roadmap for clients. New York Life has weathered every storm and continues to serve as a stalwart beacon of strength. The cornerstone of our business is grounded in our guiding principles that never waiver, no matter what the market condition. For 175 years, New York Life Insurance Company has led the industry as a trusted, highly-rated financial institution delivering on its promises to clients. Today’s world demands effective retirement solutions for tomorrow.
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