Many Insurance Executives Predict Higher M&E, GLWB Fees
June 17, 2008
One fifth of executives at insurance companies and variable product asset managers expect base mortality and expense (M&E) risk charges to rise in the next three years, according to a new Cerulli Associates survey.
Some 65% of executives expect the charges for lifetime withdrawal guarantees to increase and 55% expect fees for traditional minimum withdrawal guarantees to increase.
But the cost of a GLWB, which for single contract owners averages nearly 70 basis points, does not appear to discourage advisors from selling VAs with living benefits.
In the fourth quarter of 2007 67% of advisers surveyed by Cerulli in fourth quarter 2007said living benefits were a highly important criterion for choosing a VA provider, up from 62% the prior year.
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