"A lot of these benefits have bonuses if you don't take money out," Loffredi says, "so they will increase the benefit base. If you start with $100,000, regardless of how the account does, they will increase some."
"We allow you to search on what are these step-ups and the different percentages and whether it's simple or compound interest. After you select an appropriate annuity, you can then compare the contract language to that of a couple of similar annuities, showing you how often the company can increase benefit charges; when the benefit can be elected; what are the consequences of taking withdrawals before age 59½; and whether the guaranteed minimum withdrawal benefit is applicable over the life of both spouses or just the one.
"Each contract has its own set of rules," he says. "We have different cases of who is going to die. When you're dealing with annuities and when you're buying them for death benefits and living benefits you better make sure you understand what happens when someone dies. That's what we spell out."
He says that broker-dealers like this because it spells things out and makes things more transparent, which will decrease their liability. Also he says that it will help with SEC and Finra audits by showing which items are more suitable for clients.
The new tool also provides real-time data on both 1,950 annuity contracts and 100,000 subaccounts, Morningstar says.
-Eric Rasmussen