Retirement income planning often brings a host of concerns, from ensuring guaranteed income to navigating the uncertainty of future financial needs.
Protective® Aspirations variable annuity can provide financial professionals’ clients with both guaranteed lifetime income and the ability to pivot when needs change during retirement.
Need more income in the early years of retirement? Concerned about a future healthcare event? Worried about the impact of market volatility? With the optional SecurePaySM Protector income benefit, Protective® Aspirations variable annuity is designed to deliver more flexibility for life’s twists and turns.
Corinne Anderson, Vice President of Annuity Products for Protective, recently spoke with VettaFi about the carrier’s reemergence in the variable annuity space and how its newest variable product is built with financial professionals and future retirees in mind.
Why is Protective strategically focused on variable annuities even as many firms have exited the space or downplayed their offerings?
Anderson: From our perspective, we see what the industry is doing, but at Protective, we think there’s always going to be that need for market growth with guaranteed income. We also believe our balance sheet – what we sold in the past – means we have a pretty big appetite for taking on more variable annuities with guarantees. It makes sense for us to strengthen our offering in the variable annuity space.
The industry is dominated by a small number of carriers. How has Protective Aspirations variable annuity been designed to be competitive, and what are the standout features that financial professionals should be aware of?
Anderson: There are two things we do to focus on being competitive. One is offering the strongest guarantees that we possibly can. If the client compares our guaranteed income on a variable annuity with any of our competitors in the industry, we go toe-to-toe with them. We also focus a lot on customization, so that advisors can build a retirement strategy that works specifically for their client.
There are a few ways that we do that, including the new advance payout options. They have guarantees of higher income for a specified guaranteed period of time – three, five, eight or ten years. That allows the financial professional to plan around their client’s other income sources. If they know the client is deferring Social Security for a certain number of years or has a pension that becomes effective in a certain number of years, they can work with the annuity’s features to build something customized to the client.
Another way that we think about this is with our withdrawal rates that step up at every age of deferral. A lot of companies bucket clients into an age band, say 60 to 64, 65 to 69, 70 to 74. They tie them around those key retirement ages. But Protective wants to make sure that every consumer — whenever they decide to retire – is getting the most value for their money and the most value for deferring those extra years.
The single-age withdrawal rates offered by Protective® Aspirations variable annuity step up each year and only lock in once the client decides to start taking income. Contract owners receive a lifetime withdrawal rate targeted to their actual age at withdrawal rather than being grouped into a broad age range. Age range bands, which are common among other variable annuities, mean that a client retiring at 60 is likely to receive the same withdrawal amount as a client retiring at 64, something that does not occur with the single-age withdrawal rates offered by Protective® Aspirations variable annuity.
How did feedback from financial professionals influence the new advance payout options?
Anderson: We reached out and did a survey of financial professionals to ask about how they are using the current tools in their toolkit for Social Security planning. There were a few key pieces of feedback that we wanted to incorporate into our own features.
One was the need for certainty and confidence in their income plan. A lot of the variable annuity income benefits in the market have the payment amount, or the guaranteed amount, change when the contract runs out of money, which is completely dependent on the market – one can’t predict when that happens. What we designed is unique: It is specific and time-bound, such that the financial professional can prepare more confidently for their client.
We also heard that while these income plans are important, they obviously change during the course of retirement or entering retirement. As a result, it was important to financial professionals that they not have to make that choice up front with regard to how the client is going to take their income. They need flexibility to make that choice when they elect and not have to give something up to get that choice.
This is a key component of the SecurePay Protector benefit. The choice is made at the time the client elects income, and there’s no difference in cost, no difference in investment restrictions, no difference in roll-up during the accumulation period, based on what choice they ultimately make.
How do these new features reflect Protective’s broader mission and values?
Anderson: At Protective, our variable annuities help empower financial professionals to be protectors for their clients. We want them to be able to help their clients build a plan that can weather different market environments and whatever comes at the client in retirement. We want them to be able to adapt and pivot as their clients’ needs change. Everything we’ve done with this product is built around that value proposition. The combination of strong guarantees and features allows clients to make changes down the road for whatever life throws at them.
A diversified income strategy that includes annuities can help retirees achieve long-term financial stability.
When clients are thinking about their portfolios, they may have a few different sources of potential guaranteed income. They have Social Security, maybe a pension from their job, and annuities that they have self-funded with some level of control.
And that variable annuity piece allows them to remain invested in the market to accumulate wealth and leave a legacy. It also comes with powerful guarantees for income. That means they can count on a stream of income no matter what the market does while still having the opportunity for upside.
Healthcare expenses are a major concern for retirees, and having products that address these costs is crucial for financial security. How does Protective Aspirations variable annuity better prepare retirees for health challenges?
Anderson: We offer a feature that’s very unique in the industry – our SecurePay NH (nursing home) feature. If someone has one of our guaranteed living withdrawal benefits and, unfortunately, they need to live in a nursing home, we know they need extra funding at that time to help support them. They can, for a period of up to five years, double their withdrawal rate up to a maximum of 15%, take extra income out of that contract, and not have it impact their ultimate lifetime guarantee.
With most contracts, if more is taken than the allowed amount, it’s going to reduce the ultimate guarantee. With the SecurePay NH feature, clients worried about unexpected healthcare events have added flexibility for the future.
Given the current interest rate environment, why is now a good time to invest in a variable annuity?
Anderson: When interest rates decrease, homeowners tend to refinance their mortgages. And when rates rise — and the guaranteed growth offered by banks and insurance companies is higher as a result — consumers can consider refinancing their retirement. There’s a window of time today to lock in those guarantees for clients.
Where can financial professionals learn more about Protective Aspirations variable annuity and SecurePay Protector benefit?
Anderson: The Protective® Aspirations variable annuity web hub includes detailed information about the SecurePay Protector benefit and features, along with the new advance payout options. The SecurePay Protector benefit calculator offers a convenient way to evaluate the advance payout options and how they can work in client scenarios. And then, of course, financial professionals are welcome to reach out to the Protective wholesaling team at 888-340-3428.
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Protective refers to Protective Life Insurance Company (PLICO), Nashville, TN. Variable annuities are distributed by Investment Distributors, Inc. (IDI), Birmingham, AL, a broker-dealer and the principal underwriter for registered products issued by PLICO. IDI is located in Birmingham, AL. Product guarantees are subject to the financial strength and claims-paying ability of PLICO.
Protective® is a registered trademark of PLICO. The Protective trademarks, logos and service marks are property of PLICO and are protected by copyright, trademark, and/or other proprietary rights and laws.
Variable annuities are long-term investments intended for retirement planning and involve market risk and the possible loss of principal. Investments in variable annuities are subject to fees and charges from the insurance company and the investment managers.
Withdrawals reduce the annuity’s remaining death benefit, contract value, cash surrender value and future earnings. Withdrawals may be subject to income tax and, if taken prior to age 59½, an additional 10% IRS tax penalty may apply. More frequent withdrawals may reduce earnings more than annual withdrawals. During the withdrawal charge period, withdrawals in excess of the penalty-free amount may be subject to a withdrawal charge.
Protective Aspirations variable annuity is a flexible premium deferred variable and fixed annuity contract issued by PLICO in all states except New York under policy form series VDA-P-2006. SecurePay Protector benefits issued under rider form number VDA-P-6061. SecurePay Nursing Home benefits issued under form number IPV-2159. Policy form numbers, product availability and product features may vary by state.
Investors should carefully consider the investment objectives, risks, charges and expenses of a variable annuity, any optional protected lifetime income benefit, and the underlying investment options before investing. This and other information is contained in the prospectuses for a variable annuity and its underlying investment options. Investors should read the prospectuses carefully before investing. Prospectuses may be obtained by contacting PLICO at 800-456-6330.
