Yet on variable annuities, guaranteed lifetime withdrawal benefits in the fourth quarter of 2010 were elected by a steady 65% of contracts in which a guaranteed living benefit was selected, according to LIMRA, Windsor, Conn.
And all 11 variable annuity living benefits introduced in the first quarter of 2011 were designed as lifetime withdrawal riders, IRI says.
Research has indicated that adding a variable annuity with a guaranteed lifetime withdrawal benefit to a retirement portfolio can decrease a client's chance of running out of money and improve a portfolio's return over time.
The benefit helps increase total income by permitting a higher stock allocation while lowering the income risk of the overall combined portfolios, according to a 2010 Ibbotson Associates study sponsored by Nationwide Financial.
The downside to a variable annuity's guaranteed lifetime withdrawal benefit is that, besides its added cost, the amount that can be invested in stocks typically is limited by insurers to about 60% of a portfolio.
Many also contend that inflation can work against fixed guaranteed withdrawal features.