In this video, we walk through how to model a variable annuity with a GMIB rider.
Training Transcript: Modeling a Variable Annuity with a GMIB Rider and Annuitization
In today’s training, we’re going to walk through how to model a variable annuity with a Guaranteed Minimum Income Benefit (GMIB) rider and how to annuitize that annuity within the Voyant software. This walkthrough will start from adding the annuity into the plan and end with demonstrating how it appears once annuitized in the client’s cash flow.
Adding the Variable Annuity
To begin, click the Plus (+) button in the bottom-right corner of the screen.
Select Retirement, then choose Variable Annuity.
For this example, we’ll enter Maverick’s VA. This annuity is already owned, so it is not a new purchase. It is a qualified annuity.
Enter the following details:
Current Balance: $250,000
Surrender Period: 10 years
Death Benefit: $150,000
Step-Up Period: None
Ongoing Contributions: None
Growth Rate: 6% (or select a custom portfolio if preferred)
Fees: 2%
Beneficiary: Outside the plan
Entering GMIB Rider Details
Scroll to the GMIB section and toggle it On.
Enter:
The benefit balance for the rider
The interest rate
Whether the calculation uses simple or compound inflation
Guaranteed Period: Lifetime
Step-Up Period: None
Setting Up Annuitization
Next, scroll to the Annuitization section and toggle it On.
For this example:
Annuitize at Age: 70
Payout Type: Lifetime with 20 years certain
Escalation: None
Payout: Single life (Maverick is not married)
Interest Rate: 3%
Triggering GMIB Withdrawals
Under Planned Withdrawals, we’ll set up withdrawals based specifically on the GMIB rider.
Select Add Withdrawal.
Under Type, choose Annual GMIB Withdrawal.
Other options, such as a fixed amount, inflation-adjusted amount, or percentage withdrawals, are available if you want to draw from cash value instead.
Mark the withdrawal as Recurring.
Go to Update Timing and align these withdrawals with the annuitization event.
Set the withdrawals to continue until the end of the plan.
Click Done to save.
Turn on Details to review the activity. You should see:
GMIB activation
Annuitization beginning at age 70
The annuity payments starting at age 71 and continuing through the end of the plan
Viewing the Results
Year View
Navigate to Year View and scroll to Age 71 to see the annuitization illustrated in the client’s cash flow. You’ll see the annuity income alongside Social Security and other income sources.
Retirement Tab
On the Retirement tab, you can view additional details about the annuity. Once the annuity has been annuitized, it becomes an income stream rather than an asset.
Assets Tab
Before annuitization, the variable annuity will appear under Assets.
After annuitization, it is removed from Assets and appears solely as an income stream in the plan.
Support Resources
If you have questions or need help reviewing annuities, or any other aspect of your client’s plan, you can request support directly in the software:
Click the client’s name.
Select Request Support.
Enter your message and choose Share Client Access.
Our team will be happy to walk through anything you’re working on.