Jackson, Lincoln, Prudential Products Among Barron’s 50 Best Annuities
June 29, 2017 by Warren S. Hersch
Jackson National, Lincoln National and Prudential Financial are on the short list of A+-rated carriers offering the highest payouts of variable annuities with income guarantees, according to new research from Barron’s.
The business publication unveils this finding in a June cover story that provides a breakdown of 50 top-paying annuities, listing three or four for each of several categories. Included in the list are manufacturers of immediate and deferred income annuities, annuities for tax-deferred investing, as well as fixed-indexed and variable annuities with income guarantees.
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In the last category, Barron’s flags three products for inclusion in its Top 50 List: Prudential Financial’s Premier Retirement B/HDI v.3.0; Jackson National’s Perspectives II/LifeGuard Freedom 6 Net; and Lincoln’s Core Income Built with iShares. The three VAs boast minimum annual guaranteed payouts of $16,289, $16,000, $9,947, respectively (the amounts assume a $200,000 investment by a 55-year-old man).
Though Lincoln’s payout is the lowest of the three, the Core Income Product carries a distinct advantage: no surrender charge (versus seven years for Jackson’s and Prudential’s products). Riders for the products’ income guarantees (such as Prudential’s ability to reset income based on the highest daily account value) vary between 1.89% on Lincoln’s offering and 2.8% on Prudential’s.
Turning to fixed-indexed annuities with income guarantees, Barron’s flags Ascent 10 Bonus 2.0 from Athene as the top offering. For a 60-year-old man investing $200,000, the payout at age 70 (assuming a 2% annual increase in income) is pegged at $21,420. This compares with income of $21,368, $20,774 and $20,250 for fixed-indexed products from, respectively, American Equity, Midland National, and National Western.
Should the hypothetical retiree survive to age 90, aggregate payouts for the Athene product total a whopping $428,400. That compares with payouts of $427,360 (from American Equity), $415,480 (Midland National) and $405,000 (National Western Life).
The Barron’s report analyzes several categories — variable annuities that invest in conventional mutual funds, VAs sporting alternative investments and buffer annuities — respecting their ability to produce superior returns before annuitization. During this accumulation period, investment gains grow (as in a conventional IRA) tax-deferred.
Among the buffer (or structured) annuities Barron’s identifies top-performers from three carriers: AXA, Brighthouse Financial and Allianz. Products from the manufacturers feature comparable surrender charge periods (six years) and percentage of principal protected from losses (10%).
The products differ when measuring their caps on returns. AXA’s offering (SCS Plus) stands outs: the 6-year total return cap is 68%. This contrasts with 80% for Brighthouse’s product, Shield Level Selector. Allianz’s offering (Index Performance Strategy) has an 11.5% annual return cap in the first year.
A growing number of annuity carriers (including Voya Financial) offer structured annuities. Hybrid products that link performance to a market index, buffer annuities offer more upside potential than fixed indexed annuities and greater protection from market slides than conventional VAs — a key consideration for investors with limited appetite for risk-taking. According to LIMRA, sales of buffer annuities totaled $5.5 billion in 2016, more than double the $2.6 billion recorded in 2015.
Turning to fixed deferred income annuities, Lincoln ranks among the top four in three of Barron’s subcategories: personal pensions; personal pensions as longevity insurance; and personal pensions within an IRA. Other annuity carriers included in the subcategories (ranked, respectively, in terms of annual payouts at ages 70, 80 and 84) include Symetra Life, New York Life, Principal Financial and Foresters Life.
Barron’s subscribers can view tables for The 50 Best Annuities here.