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Guaranteed Lifetime Withdrawal Benefit Rider

Guaranteed and Predictable Income for Life

Now you can add a Guaranteed Lifetime Withdrawal Benefit (GLWB) rider to your Puritan Life Insurance Company of America (Puritan) annuity that will guarantee you income payments for life. You can count on a steady and predictable stream of income for as long as you live and can enter into retirement with security and peace of mind.

According to a 2008 study conducted by Ernst & Young LLP on behalf of Americans for Secure Retirement, three out of five middle-class retirees will outlive their financial assets if they attempt to maintain their pre-retirement standard of living. The study finds that retirees are much better prepared to have a financially secure retirement if they have a guaranteed source of retirement income beyond Social Security. One way to solve this problem is to attach a GLWB rider to your Puritan annuity. The GLWB rider allows you to calculate the exact amount of money you will receive each month in retirement and provides you with a “paycheck for life”. When you purchase a GLWB rider from Puritan, you can enjoy your retirement knowing that you cannot outlive this guaranteed lifetime paycheck.


How It Works

Tom and Martha have decided to purchase a Puritan annuity with a GLWB rider to supplement their income in retirement. They are currently both 65 years old. Tom and Martha put $500,000 into a Puritan annuity, which is credited 2.5% interest per year. Assuming no withdrawals are taken in the first 15 years, Tom and Martha will have an annuity that has an Accumulation Value of $643,8991 after 15 years. During that time, the Benefit Base of their GLWB rider has grown to $875,000 (5% simple interest per year). At 80, if Tom and Martha choose to begin their Guaranteed Income Amount (GIA) payments, their guaranteed monthly payments would be $4,375.00, payable monthly for the remainder of both of their lives (if they elected joint benefits).

Each of these payments is deducted from the accumulation value of their annuity. If Tom and Martha outlive the Accumulation Value in their annuity, they will continue to receive their GIA payments for the rest of their lives. If Tom and Martha both pass away while they have a positive Accumulation Value, the Accumulation Value will be paid to their beneficiaries as a death benefit2. Therefore, Tom and Martha can enjoy their retirement knowing that their funds are working for them for the rest of their lives.

Three Phases of the Guaranteed Lifetime Withdrawal Benefit Rider

Your GLWB rider may go through three distinct phases including: the Accumulation Phase (initial rider date through the date you elect to begin receiving your GIA payments), the Income Phase (from your first GIA payment until the accumulation value reaches zero), and the Lifetime Benefit Payout Phase (any GIA payments made from the day the accumulation value drops to zero through the end of your life).

Accumulation Phase: The initial Benefit Base of the GLWB rider is the premium paid into the contract plus any premium bonus associated with the contract. Each subsequent year, on the anniversary date, and assuming no withdrawals are taken, the Benefit Base will roll up at 5% (simple interest). This means that if you have an initial $100,000 Benefit Base, and you took no withdrawals during the year, your Benefit Base on your first anniversary would be $105,000. Additionally, you will receive an annual automatic step up in your Benefit Base if the accumulation value of your Puritan annuity is greater than your Benefit Base. The Benefit Base will continue to roll up for 15 years.

Income Phase: At any time after you (or if electing joint coverage, the younger of you and your spouse) turn 50 and before you reach 85, you can elect to begin your lifetime GIA payments. This date is called your income activation date. On this date, your Benefit Base will be set. As long as you do not withdrawal more than your GIA in a year (which would lower your Benefit Base and therefore your guaranteed income amount) you will receive GIA payments for the remainder of your life (and your spouse’s life if joint coverage is elected).

Lifetime Benefit Payout Phase: If the Accumulation Value of your base policy equals $0 but your Benefit Base is greater than $0, the base policy that this GLWB rider is attached to will end but your GIA payments will continue to be paid for the remainder of your life (and your spouse’s life if joint coverage is elected).

The longer you wait to start your Income Phase, the higher your Guaranteed Lifetime Withdrawal Percentage (and therefore your GIA) will be.

Assuming $500,000 Benefit Base
Withdrawal Age Guaranteed Lifetime Withdrawal Percentage (Single Life) Guaranteed Lifetime Withdrawal Percentage (Joint Life) Annual Payment (Single Life) Monthly Payment (Single Life)
50-54 3.5% 3.0% $17,500.00 $1,458.33
55-59 4.0% 3.5% $20,000.00 $1,666.67
60-64 4.5% 4.0% $22,500.00 $1,875.00
65-69 5.0% 4.5% $25,000.00 $2,083.33
70-74 5.5% 5.0% $27,500.00 $2,291.67
75-79 6.0% 5.5% $30,000.00 $2,500.00
80-85 6.5% 6.0% $32,500.00 $2,708.33

1 The Accumulation Value assumes 2.5% interest compounded annually and a .65% annual GLWB rider charge.
2 The Benefit Base is not the same as your annuity’s Accumulation Value and is not available for withdrawal or upon death.