New Highest Daily Death Benefit Locks in Account Value Highs for Legacy Planning
NEWARK, N.J., August 20, 2012 - Prudential Annuities, the domestic annuity business of Prudential Financial, Inc. (NYSE:PRU), today announced the launch of Highest Daily Lifetime Income 2.0, which includes the introduction of a Highest Daily Death Benefit. Highest Daily Lifetime® Income 2.0 replaces Highest Daily Lifetime® Income and Spousal Highest Daily Lifetime Income benefits in all states where it has been approved.
Prudential’s Highest Daily Lifetime Income benefits allow investors to ‘lock in’ the highest daily value of their annuity contract, for income purposes, each day the market is open and can be purchased for an additional fee with a variable annuity from Prudential issuing companies. The new benefits offer a Protected Withdrawal Value (the basis for guaranteed lifetime income) based on the Highest Daily account value plus an immediate five percent annual compounded growth until an investor begins lifetime withdrawals.
“The introduction of our Highest Daily Death benefit will allow investors in The Retirement Red Zone ® to combine the power of our daily guarantees with legacy planning,” said Bruce Ferris, head of Sales and Distribution for Prudential Annuities. “Today’s launch of Highest Daily Lifetime Income 2.0 reflects our proactive approach to risk management, as well as our commitment to maintaining the compelling value it brings to those planning for retirement.”
Highest Daily Lifetime Income 2.0 retains the five percent annual compounded growth rate of the Highest Daily Lifetime Income product suite, while adding the new death benefit. Fees, age eligibility, payout bands and an investment fund choice have been adjusted for the new offering.
Specific details are outlined below:
- Fees : 1.0 percent single, 1.10 percent for spousal and 1.50 percent for single with Lifetime Income Accelerator (LIA).
- Minimum issue age: Age 50 for the full suite of living benefits.
- Age-banded payouts: New age banded payouts include:
- Ages 50-54: 3 percent
- Ages 55-64: 4 percent
- Ages 65-84: 5 percent
- Age 85+: 6 percent
- Spousal versions are 50 basis points lower for all age bands.
- Investment platform: within the lineup of asset allocation portfolios, the AST Horizon Growth Asset Allocation portfolio will become the AST J.P. Morgan Global Thematic Portfolio.
- Enhanced death benefit: Highest Daily Lifetime Income 2.0 and Spousal Highest Daily Lifetime Income 2.0 introduce a new optional integrated death benefit that locks in account highs daily. This benefit replaces the Combination five percent roll-up and highest anniversary value death benefits. The combined fee for the enhanced death benefit and income guarantee is 1.50 percent for single and 1.60 percent for spousal.
Launched in 2006, Prudential Annuities’ Highest Daily suite of living benefits are the only benefits available that offer daily lock-ins for retirement income purposes—and immediately grow them until the first lifetime withdrawal. Key features include:
- Daily step-ups: 100% certainty in capturing portfolio gains for income purposes, until first lifetime withdrawal.
- Daily benefit base growth: benefit base grows every day regardless of market conditions due to immediate credit of the growth rate, until first lifetime withdrawal.
- Real-time stacking: the ability to apply the guaranteed growth rate on top of the Highest Daily step-up on a real-time basis.
- Innovative investment platform: offering 19 actively managed asset allocation portfolios that help to drive daily step-ups.
- Protected Withdrawal Value Guarantee: Highest Daily Lifetime Income 2.0 and Spousal Highest Daily Lifetime Income 2.0 also offer a minimum Protected Withdrawal Value guarantee of 200 percent of the account value at election on the 12th anniversary, assuming no withdrawals have been taken in those 12 years. The Protected Withdrawal Value is only available through withdrawals. It is not available as cash or a lump sum. The account value is not guaranteed, can fluctuate, and may lose value.
- Proprietary Risk Management Approach: Highest Daily Lifetime Income 2.0 and Spousal Highest Daily Lifetime Income 2.0 incorporate the fundamentals of a proprietary risk management approach that monitors an investor’s account daily, and, only if specified by the system, automatically transfers amounts between the chosen variable investment portfolios and the AST Investment Grade Bond Portfolio.
- Post-withdrawal step-ups: After Lifetime Withdrawals begin, Highest Daily Lifetime Income 2.0 and Spousal Highest Daily Lifetime Income 2.0 provide annual opportunities for increased income based on the account’s highest daily value.
Reinforcing the value investors place on retirement income guarantees, overall election rates for Prudential Annuities’ variable annuity optional living benefits grew to 92 percent during the second quarter of 2012.
Prudential Financial, Inc. (NYSE: PRU), a financial services leader, has operations in the United States, Asia, Europe, and Latin America. Prudential’s diverse and talented employees are committed to helping individual and institutional customers grow and protect their wealth through a variety of products and services, including life insurance, annuities, retirement-related services, mutual funds and investment management. In the U.S., Prudential’s iconic Rock symbol has stood for strength, stability, expertise and innovation for more than a century. For more information, please visit http://www.news.prudential.com/
Investors should consider the contract and the underlying portfolios’ investment objectives, risks, charges and expenses carefully before investing. This and other important information is contained in the prospectus, which can be obtained from your financial professional. Please read the prospectus carefully before investing.
A variable annuity is a long-term investment designed for retirement purposes. Investment returns and the principal value of an investment will fluctuate so that an investor's units, when redeemed, may be worth more or less than the original investment. Withdrawals or surrenders may be subject to contingent deferred sales charges. Withdrawals and distributions of taxable amounts are subject to ordinary income tax and, if made prior to age 59½, may be subject to an additional 10% federal income tax penalty. Withdrawals, other than from IRAs or employer retirement plans, are deemed to be gains out first for tax purposes. Withdrawals reduce the account value and the living and death benefits.
Annuity contracts contain exclusions, limitations, reductions of benefits and terms for keeping them in force. Your licensed financial professional can provide you with complete details.
Variable annuities are issued by Pruco Life Insurance Company (in New York, by Pruco Life Insurance Company of New Jersey), Newark, NJ and distributed by Prudential Annuities Distributors, Inc., Shelton, CT. All are Prudential Financial companies and each is solely responsible for its own financial condition and contractual obligations. Prudential Annuities is a business of Prudential Financial, Inc.
All guarantees, including optional benefits, are backed by the claims-paying ability of the issuing company and do not apply to the underlying investment options.
Optional living and death benefits may not be available in every state and may not be elected in conjunction with certain optional benefits. Optional benefits have certain investment, holding period, liquidity, and withdrawal limitations and restrictions. The benefit fees are in addition to fees and charges associated with the basic annuity. Please see the prospectus for more information.
Variable annuities offered by Prudential Financial companies are available at a total annual insurance cost of 0.55% to 1.75%, with an additional fee related to the professionally managed investment options. Note: All products may not be available through all third party broker/dealers.
The Highest Daily Lifetime Income suite of benefits uses a predetermined mathematical formula to help us manage your guarantee through all market cycles. Each business day, the formula determines if any portion of your account value needs to be transferred into or out of the AST Investment Grade Bond Portfolio (the "Bond Portfolio"). Amounts transferred by the formula depend on a number of factors unique to your individual annuity and include:
(i) The difference between the account value and the Protected Withdrawal Value;
(ii) How long you have owned the benefit;
(iii) The amount invested in, and the performance of, the permitted subaccounts;
(iv) The amount invested in, and the performance of, the Bond Portfolio; and
(v) The impact of additional purchase payments made to and withdrawals taken from the annuity.
Therefore, at any given time, some, most, or none of the account value may be allocated to the Bond Portfolio. Transfers to and from the Bond Portfolio do not impact any income guarantees that have already been locked in. The Protected Withdrawal Value is only used to calculate the guaranteed lifetime income and the benefit fee. It is separate from the account value and is not available as a lump sum withdrawal. The account value is not guaranteed, can fluctuate, and may lose value.
Any amounts invested in the Bond Portfolio will affect your ability to participate in a subsequent market recovery within the permitted subaccounts. Conversely, the account value may be higher at the beginning of the market recovery; e.g., more of the account value may have been protected from decline and volatility than it otherwise would have been had the benefit not been elected. Please note: We are not providing investment advice through the formula. You may not allocate purchase payments or transfer account value into or out of the Bond Portfolio. See the prospectus for complete details.
Fixed income investments are subject to risk, including credit and interest rate risk. Because of these risks, a subaccount’s share value may fluctuate. If interest rates rise, bond prices usually decline. If interest rates decline, bond prices usually increase.