Posted by OnAmerican Life Insurance Guide©️ to "Insurance Rider"In the column, it explains what Rider is, how to translate it in Chinese, and how policyholders should understand and purchase it.
In today's column,The Life Tank©️InvitedLife Insurance Financial Advisor Heather Xiong CFP®️, to help interpret a common issue that recent insurance groups are concerned about: Rider, a guaranteed lifetime income benefit.
What is the Guaranteed Lifetime Income Benefit Clause?
Guaranteed Lifetime Income Benefit Clause, the English name is "Guaranteed Lifetime Withdrawal Benefit", abbreviated as GLWB.
The specific retirement annuity insurance issued by some life insurance companies includes this additional clause called "Guaranteed Lifetime Withdrawal Benefit (GLWB)".
The policyholder can decide to choose this additional clause at his own discretion, and it is usually selected by default.
How does the Guaranteed Lifetime Income benefit clause work?
We can understand the "Guaranteed Lifetime Income Benefit Clause" as an additional savings and financial management account.
For example, Mr. Wang is 50 years old this year, invested $401 in premiums from 200,000k, opened this retirement annuity account, and selected the "guaranteed lifetime income benefit clause".
At this time, the insurance company helps us manage our financial management, and accumulates our "Guaranteed Lifetime Income and Welfare Terms" account according to the promise and agreement.
We assume that the insurance company's promise is8% annual compound interest growth, interest locked for 10 years.Then when Mr. Wang is 60 years old, after a 10-year accumulation period, his "Guaranteed Lifetime Income Benefit Clause" account will have a balance of $431,785.
At this time, Mr. Wang decided to start receiving retirement annuity income for life. At this time, the insurance company will pay Mr. Wang an equal amount of pension year by year or month by month according to the specific terms and figures at the time of contract purchase, until his life.
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Advantages of the Guaranteed Lifetime Income Benefit Clause
This rider of guaranteed lifetime retirement income,The core is to protect the policyholder's funds from market declines.
The two main features of this additional clause are:
- No matter how much the market falls, the amount the insured receives every year or every month will not be affected by the outside world.
- The amount of retirement income that can be received for life can be determined in advance and guaranteed at the moment of applying for the policy.
Disadvantages of the Guaranteed Lifetime Income Benefit Clause
An "obvious" downside to the guaranteed lifetime income benefit rider for some policyholders is that the extra benefit costs money, covering its cost.
According to market observation data, this type of specific retirement annuity insurance account will charge an annual management fee of about 1% after adding this additional clause.
Column summary
Due to various factors such as the protection bias of laws and regulations for middle-aged and elderly people, this type of specific retirement annuity insurance account issued by some life insurance companies has a simple structure, obvious advantages and disadvantages, no hidden charges, and is easy for middle-aged and elderly people to understand.
At the moment of purchase, the policyholder can determine the specific return in the future and the number of future retirement benefits.These numbers are written into the policy contract and guaranteed by the life insurance company.
In contrast to most other types of retirement annuity insurance on the market, there is no specific guarantee of lifetime income.Therefore, the main points of purchasing retirement annuity insurance that provide lifetime income,It is to identify this product and whether it can provide future "guarantee" at the time of application.After that, further compare the guaranteed amount of payment.
Generally speaking, although this type of specific retirement annuity financial account does not distinguish between ages,But I think in practice, it is more suitable for individuals or families aged 50 and above.(End of the article)
