New Twists on Premium Bonuses Present Tradeoffs
November 21, 2024 by Cyril Tuohy
“It used to be that all premium bonuses were immediately credited, with no vesting schedules or recapture charges,” said Sheryl Moore, CEO of Wink, publisher of Wink’s Sales & Market Report.
Some annuities even credited a premium bonus to the annuity each year, or with every subsequent premium payment, but these have largely become scarce, said Moore.
Vesting schedules require owners to remain in their annuity to receive certain benefits. Premium bonuses without vesting schedules mean less profit for the insurer in the event of a surrender (beyond the penalty-free amount) during the surrender charge period, Moore said.
She counts only seven variable annuities with premium bonuses up to 4%, and 76 multiyear guaranteed annuities with premium bonuses up to 2.50%. Among fixed-indexed annuities, 101 or about 15% of all contracts offer premium bonuses up to 21%, Moore said.
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