Vanguard Adds GLWB Option to Variable Annuity

The rider is issued by Monumental Life Insurance Company.

A GLWB is an optional rider that, when added to a variable annuity contract for an additional fee, guarantees a fixed percentage of the Total Withdrawal Base can be withdrawn annually for the annuitant’s lifetime (and that of his or her spouse, if desired). These withdrawals continue for life, regardless of market performance and even if the account value is exhausted. Unlike traditional annuitization, Vanguard Variable Annuity clients electing the GLWB retain access to their principal and can stop taking withdrawals at any time without incurring a penalty. Upon death, any remaining accumulated value will go to a beneficiary.

GLWB withdrawals can begin anytime after age 59, and the withdrawal percentage is based on age at the time of the first withdrawal and whether the single or joint life option is elected. During rising markets, available annual withdrawals may also increase.

If withdrawals or market declines deplete the accumulated value in the designated investments, the insurance company will continue to make payments for life. In exchange for these benefits, the GLWB rider comes with an additional cost; investors pay an additional expense of 0.95% of the Total Withdrawal Base per year.

The rider will be available on three portfolios within the Vanguard Variable Annuity:

• An existing Balanced Portfolio, which is actively managed by Wellington Management Company, LLP, and invests 60%-70% in stocks and 30%-40% in bonds.
• A new Moderate Allocation Portfolio, which invests 60% of its assets in stocks and 40% in bonds, and employs an index approach.
• A new Conservative Allocation Portfolio, which follows an index approach and invests 40% of its assets in stocks and 60% in bonds.