Advanced Sales Reports Variable Annuity Data
May 5, 2008
Advanced Sales Corp., publisher of Annuity Intelligence Report and a provider of comparative variable annuity contract information, has released data on the U.S. variable annuity market, based on a review of the 280 active contracts in its database.
The firm estimated that variable annuities are selling at a rate of about two million per year with an average premium of $100,000.
Between 10 and 15 independent broker/dealers report at least 50 transactions per day and $70 million in gross revenues per year.
The Oakbrook Terrace, Illinois, firm also found:
- 38% of variable annuity contracts are structured improperly and that one in four of those (9% to 10% of all contracts) could be described as "disasters waiting to happen."
- 81% offer an optional lifetime withdrawal benefit, of which 99% offer a 5% withdrawal rate. Five percent of contracts also offer an optional 6% withdrawal rate. About 78% of contracts include a return of premium at death as a standard benefit.
- Over half of all lifetime withdrawal benefits are “age banded,” with the guaranteed withdrawal percent varies depending on the client’s age when they take their first withdrawal.
- 83% of all lifetime withdrawal benefits and 81% of all guaranteed minimum accumulation benefits limit the number of eligible investment choices.
- 60% of contracts have administrative fees of $30 to $35. Almost 85% of contracts waive administrative fees on contracts with values of $50,000 or more.
- Average fees per contract benefit are: guaranteed minimum income benefit, 45 basis points; guaranteed minimum accumulation benefits, 38 bps; guaranteed minimum withdrawal benefit, 44 bps; guaranteed lifetime withdrawal benefit, 67 bps; enhanced death benefit, 28 bps. The average mortality and expense risk fee was 138 bps.
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