Protection for future income
Learn how Paul protected his income despite a drop in account value
In 2007, a 75-year-old Paul purchased a variable annuity with a living benefit for $731,000. After the market crash just a year later, the account value fell to $430,000. Frightened by the market decline, Paul considered moving his money.
Paul’s adviser reminded him that the living benefit protected the benefit base—the initial investment amount used to determine his income and death benefit payout. Relieved, Paul did not liquidate his annuity.
If Paul had been in a traditional managed account plan with mutual funds, there would have been no protection for his investment and he would have had only $430,000 to draw income from or pass on to beneficiaries.
In 2013, Paul started receiving lifetime income benefits—based on the $731,000 benefit base—the amount of his original investment.