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A ‘hybrid annuity’ or ‘hybrid income annuity’ is simply a marketing term applied to any annuity that is really two different types of annuities combined into one contract. Generally speaking, most hybrid annuities will combine the benefits of immediate and deferred contracts, and may often times add an additional life insurance component. Most likely, you’ve heard the term bantered about as a solution to retirement planning, and portrayed in the proper noun sense as if the ‘Hybrid Annuity’ was a product class of its own. We’re glad you found us while looking for a straight answer, because it can be quite difficult for you to find a hard and fast definition of the general term ‘hybrid annuity’. Allow us to show you some specific examples of the types of annuities that can be considered a ‘hybrid annuity’. Simply click the link on each subheading to be directed to the page that more accurately describes the product that may be marketed as a mysterious ‘hybrid income annuity’.
Fixed Index Annuity- The Most Common Hybrid Annuity
These are perhaps the most common annuity type referred to as ‘hybrid annuity’ products. The characteristics that make them ‘hybrid’ are:
Variable Annuity-
These tax-sheltered investments have various options that combine market growth with various safety features to make them ‘hybrid annuities’.
Guaranteed Income Riders – Contract Options That Make Simple Annuities Into Hybrids:
Quite prevalent on fixed index and variable annuities, guaranteed income riders (often referred to as GLWB or GMIB) add the stability and longevity benefits of immediate annuities to a deferred growth contract. In their basic form, fixed index and variable annuities offer asset growth over time- at a fixed rate in the case of a fixed annuity, and at a market driven rate for index annuities. However, a GMIB type income riders add additional features that are meant to ensure there is a guaranteed lifetime income benefit amount, regardless of account performance over the term of the contract. Beware however that account value growth and income benefit growth are not the same! This is the single biggest misconception in the annuity marketplace, and is often glossed over. A thorough analysis is in The Annuity Report, free for our members in the signup box at the bottom of the page.
Hybrid Annuity- Summary
Again, hybrid annuities combine features from two types of annuity contracts to offer a larger overall set of benefits to a given product. There’s not a kind of annuity called a ‘hybrid’ per se.
Click Here to See How Hybrid Annuities Work
We save the most comprehensive information for The Annuity Report, which is free for subscribers. Sign up today and dig into the details so you can determine exactly which type of hybrid annuity best suits you. For direct help from an annuity expert, don’t hesitate to call or email with specific questions.
