Information On Variable Annuities

It can be difficult to find objective information on variable annuities. A variable annuity will pay high commissions to the person selling it, so they have a strong incentive to convince you it is the best investment for you. Below you'll find information on what a variable annuity is, alternatives to variable annuities, questions to ask about a variable annuity and much more.

A variable annuity, just like any annuity, is a contract with an insurance company. With a variable annuity, you place your funds with an insurance company and you choose how the money will be invested. You choose investments from a pre-selected list of funds.

Most variable annuity policies offer features called “riders” that you can add to your policy. These riders allow you to buy enhanced death benefit options and/or living benefit options, but they can be expensive. Learn more here.

Here is an analysis of a variable annuity, the kind often sold by financial representatives, to a portfolio of index funds.

There are plenty of ways to create retirement income, but only a few of them come with guarantees. Many new variable annuities offer a guaranteed minimum withdrawal benefit or lifetime income rider which guarantee lifetime income without requiring you to give up access to your principal.

A variable annuity can have expenses as high as 3-4% or more per year. Take the time to understand all the fees and expenses before you buy a variable annuity.

After conducting a thorough review of your existing variable annuity contract, you may decide it would be best to either surrender (cash in) your variable annuity contract, or exchange your variable annuity for a new contract that has much lower expenses. Here is how you decide which is better.

A variable annuity, especially a broker-sold variable annuity, can have high fees, high surrender charges, and less than favorable tax treatment when compared to many other investment alternatives. For that reason, before you buy a variable annuity, compare it to other investment choices.

Variable annuity taxation is talked up, but the reality is you may pay more in taxes by using a variable annuity than if you had used other investment alternatives.

Before you invest, understand how variable annuities work, and what fees and expenses they may have.

Does the annuity really provide the benefits you think it does? Here are 8 questions to ask before you buy a variable annuity.