We are seeing more and more RILA contacts come through the door as time goes on and uncertainty in the market continues. If you are not familiar with these types of contracts yet, many of these contracts provide clients with a variety of different design options that allow them to participate in the market in a variety of different ways, with a buffer against losses, at no cost. Some designs even step-up client earnings to a predetermined amount if the client was above 0.00% returns for the year. The top “step-up” rate for this design that I am aware of out there right now is at Brighthouse.
The “step-rate” option at Brighthouse can be put on the 6-year or 3-year Shield contract. It is a 1-year term option that currently gives you 10% protection each year with a 10% cap (on the 6-year contract) and a 7.5% cap (on the 3-year contract). The cool thing about this option is that as long as the client’s return for the year is above 0.00%, the client will get a “step-up” to the 10% cap (6-year contract) or 7.5% cap (3-year contract) for that year while Brighthouse assumes the first 10% of losses each year. So, every year of the contract, the client gets 10% downside protection, and if the returns were above 0.00%, they will be locked into a 10% (6-year contract) or 7.5% (3-year contract) gain for that year.
As I mentioned above, the Shield product is becoming more and more popular for financial professionals that have mutual fund clients that are concerned about the volatility in the market but still like the idea of market participation with the addition of downside protection and no fees. It has also shown to be a good fit for clients in fixed annuities, fixed index annuities and bond funds that are looking for a little more in returns than they are currently getting while maintaining some downside protection.
If you would like to talk in more detail about this contract, the different options available, or potential opportunities, please give me a call. Also, I have attached a link below to the Shield website where you can learn more about the product and see current rates and design options.