Manulife retools IncomePlus

The cost of guaranteed income is about to go up, as Manulife shutting down sales of the original version of its guaranteed minimum withdrawal benefit (GMWB) product, effective Oct. 2, 2009.

In its place, Manulife is rolling out IncomePlus “version 2” — which will see a 10-basis point increase in fees — effective Oct. 5. Existing “version 1” contracts will remain in effect, and the existing guarantees, core features and benefits will remain intact.

Fund fee levels on version 1 will also rise by 10 basis points.

“We believe our go-forward products are simpler and effectively address our clients’ growing investment goals at various stages of their lives,” said J. Roy Firth, executive vice-president, individual wealth management, with Manulife Financial. “The result is a more streamlined suite of segregated fund products designed to meet different client needs — from investing and accumulating wealth to their retirement and estate planning for their families.”

Firth explained that the fee increases are needed to offset the risks that the products pose to the firm. These risks became abundantly clear in the wake of the extreme market downturn last fall, as assets in the program were hammered lower, leaving Manulife on the hook for the guarantees.

It’s not all bad news, though, as IncomePlus version 2 offers a new Joint Life Payout Option, a rider that allows a surviving spouse to continue receiving the income stream after the death of the contract holder.

The adjustments to the IncomePlus program were part of a larger overhaul of the company’s GIF Select segregated fund lineup.

InvestmentPlus offers access to more than 75 funds, along with basic protection and investment flexibility.

EstatePlus is a new estate planning-focused series offering a 100% Death Benefit Guarantee with resets.

With the introduction of EstatePlus to the GIF Select platform, GIF and GIF encore will close to new sales as well, effective Oct. 2, 2009. Existing contracts remain in effect, and the existing guarantees, core features and benefits remain unchanged.

In addition, the new GIF Select platform will include seven new investment fund options, including fund bundles from two new fund partners: AIC and AGF.

Manulife is not the first to address the risks posed by the guarantees in its products. In June, Sun Life drew the wrath of advisors when it announced changes to its SunWise Elite GMWB program.

Read Sun Life defends GMWB changes

(09/17/09)