![]() 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. You can also schedule a call or call us directly at 80.New York Life and Charles Schwab have little in common. And we're here to help! We have Retirement Income Specialists that are well-versed in risk management. How USAA can help Elapsed Time 52 seconds īut through planning, you can mitigate these risks. If you live a long life with a long retirement, there's a higher likelihood the other risks may disrupt your retirement plan. Longevity risk is the most important to think about. Longevity risk - while a long life can be a great problem to have, you run the risk of outliving your money. Investment risks - like Inflation and market risk. Health-related risks - these can come in many forms such as large, unexpected medical costs or diminished capacity to manage your own finances. Legislative risks - this includes changes to taxes or retirement plans and the future of Social Security. Personal risks - like spending more than your retirement budget or changes to your family dynamics. Here are some risks to consider while planning for retirement: We believe a balanced approach to retirement can help protect against risks that may impact your retirement outcome. In our last video, we shared how to build a retirement strategy to live your best life in retirement. Hey there, I'm Tony Medrano with your Retirement Income Team. Transcript Date: JanuThe importance of Social Security Elapsed Time 0 Seconds
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