guaranteed lifetime withdrawal benefit 2 rider
Guaranteed growth, income and control for the years ahead.
The Guaranteed Lifetime Withdrawal Benefit 2 (GLWB2) Rider can help your clients experience guaranteed minimum growth of 5% during the accumulation or deferral phase of their annuity and guaranteed income they can't outlive during the payout phase.
The GLWB2 rider can be elected at issue of the Ameritas Advisor No-Load VA policy if your client is between the ages of 50 and 85. If your client is younger than age 50, they will be given the opportunity to add the rider once they reach that age. The combined power of the no-load variable annuity with the rider can help provide your clients with:
- Control of their assets as the annuity has no withdrawal charges
- The potential to keep pace with inflation by being invested in the market
- Potential downside market protection
- Guaranteed income for life
- The opportunity to provide a legacy for their families
The purpose of the Accumulation Phase is to guarantee a minimum return, which is tracked as the Premium Accumulation Value. The Premium Accumulation Value is one of the values used in determining the Benefit Base that will provide the Lifetime Withdrawal Benefit Amount when it is time to begin taking withdrawals.
- This guaranteed 5% accumulation on Premium Accumulation Value does not affect the Policy Surrender Value, which will continue to fluctuate with the market results
- Policy owner must choose one of the permitted GLWB Models: VM Growth, VM Moderate Growth or VM Moderate Models
- 100% of the value must be allocated to a single model
- The client does have the ability to change between the permitted models
- During the Accumulation Phase,Ameritas will track three values
- Premium Accumulation Value
- Maximum Anniversary Policy Value
- Policy Value
Example 1: Assume the following (example assumes current charges and Policy terms; actual results will depend on Policy experience): The client is 55 years old when he/she purchases the Policy with the GLWB2 rider (Single Life option) and makes an initial single premium payment of $100,000. The client makes no withdrawals or additional premium payments.Assume that after the first year, the Policy Value has decreased to $98,000 solely due to negative performance of the Subaccounts. On the first Policy Anniversary, the Policy value would be $98,000, the Premium Accumulation Value would be $105,000 ($100,000 increased by the Premium Accumulation Rate of 5%), and the Benefit Base (assuming the client enters the Withdrawal Phase) would be $105,000.
Example 2: Assume that at the end of the second Policy Year, the client has made no withdrawals or additional premium payments. The Policy Value has increased, due to positive performance of the Subaccounts, to $104,000. The Policy value would be $104,000, and the Premium Accumulation Value would be $110,250 (at the prior Premium Accumulation Value of $105,000 increased by the Premium Accumulation rate of 5%). The Maximum Anniversary Policy Value, which was $98,000 on the first Policy Anniversary, is now $104,000. So the Benefit Base would be $110,250, if the client enters the Withdrawal Phase.
Example 3 - Reset: Assume that at the end of the third Policy Year, the client has made no withdrawals or additional premium payments. The Policy Value has increased, due to positive performance of the Subaccounts, to $117,000. The Policy value would be $117,000 and the Premium Accumulation Value would be $117,000 as this exceeds the prior Premium Accumulation Value of $110,250 increased by the Premium Accumulation rate of 5%.The Maximum Anniversary Policy Value, which was $104,000 on the second Policy Anniversary, is now $117,000. So the Benefit Base would be $117,000 if the client enters the Withdrawal Phase.If the client does not enter the withdrawal phase, this would result in a reset of the 10 year period for the guarantee of 5% on the Premium Accumulation Value.
- The Withdrawal Phase is not the same as annuitization as the policy remains 100% liquid
- The Withdrawal Phase can be entered into from the Accumulation Phase as soon as 30 days after the policy is issued
- Rider charge continues
- Once withdrawals begin, the distribution factor is locked in for remainder of contract life
- Step-up of benefit base possible at each anniversary date
The Lifetime Withdrawal Benefit Amount (LWBA) is calculated as follows:
LWBA = Benefit Base X Lifetime Distribution Factor
Once set, the Lifetime Distribution Factor remains constant for the owner's lifetime.
If Policy Value reaches zero:
- LWBA distributions continue until death of last surviving covered person
- LWBA remains level
- No additional premiums allowed
- Step-ups will not occur
- Death benefit is remaining balance, if any
For more information about the rider, expenses and restrictions, please see the Policy prospectus.
Age Nearest Birthday. The actual age rounded to the nearest full number of years. For example, actual age of 49 years, 6 months is age 50 nearest birthday and 85 years, 6 months is age 86 nearest birthday. The GLWB2 rider can only be issued to individuals with an age nearest birthday between ages 50 and 85.
Benefit phases are defined as:
- Accumulation Phase. The period of time between the Policy Date and the first date of the Withdrawal Phase. If the rider is elected, the policy will be in the Accumulation Phase for at least 30 days.
- Withdrawal Phase. The period of time beginning with the occurrence of the first withdrawal as outlined in the Withdrawal Phase section of the rider. The first withdrawal will be at least 30 days after the Policy Date.
- Guaranteed Phase. The period of time during which Lifetime Withdrawal Benefit Amount payments continue to be made, although the Policy Value has been reduced to zero.
Benefit Base. The amount used in conjunction with the lifetime distribution factor to determine the Lifetime Withdrawal Benefit Amount. The Benefit Base is determined at the beginning of the Withdrawal Phase, and the initial benefit is equal to the greatest of the following:
- Policy Value
- Premium Accumulation Value
- Maximum Anniversary Policy Value
Covered Person(s) means:
- The owner(s) of the Policy,
- The annuitant(s) if the owner of the Policy is a non natural person, such as a trust, or
- The named spouses at the time the joint spousal option is selected. Once the rider is elected and the Policy is issued, no changes to the Covered Person(s) will be permitted.
Excess Withdrawal. The portion of any withdrawal taken during the Withdrawal Phase that makes the total of all withdrawals in a Policy Year exceed the current Lifetime Withdrawal Benefit Amount at the time of withdrawal.
Lifetime Withdrawal Benefit Amount (LWBA).The maximum amount that can be withdrawn under this rider during a Policy Year without reducing the Benefit Base.
Maximum Anniversary Policy Value. The highest Policy Value on any Policy Anniversary during the Premium Accumulation period (currently 10 years, however we may change the length of this period) after the later of the Rider Date or the most recent reset date.
Premium Accumulation Value. The sum of premiums paid accumulated at an annual compound rate of interest for a 10-year period during the Accumulation Phase beginning with the later of the Policy Date, the Rider Date or the most recent reset date. The rate of interest is:
- 5% for the Policy Year in which no withdrawal is taken
- 0% for the Policy Year in which a withdrawal is taken
The initial Premium Accumulation Value is equal to the premiums paid at issue of the Policy or the Policy Value as of the Rider Date.
Remaining Balance. The most recently determined Benefit Base minus the sum of all withdrawals made since the later of the beginning of the Withdrawal Phase or the most recent step-up of the Benefit Base. The Remaining Balance will never be less than zero.
Rider Charge. The rider charge is deducted monthly and is calculated as follows:
Annual Rider Charge / 12 X Rider Charge Base
Rider Charge Base (RCB). Accumulation Phase: The RCB is the initial premium received at the time the Policy is issued. A new RCB will be established on each subsequent Policy Anniversary Date and will be equal to the maximum of the Policy Value, Maximum Anniversary Policy Value or Premium Accumulation Value. During the Policy Year, the RCB will be increased by any additional premium received and decreased proportionally by a withdrawal.
Withdrawal Phase: The RCB is equal to the Benefit Base.