Philip Richardson

The Richardson Group

The 3 Biggest Concerns About Variable Annuities

Important concerns that can help make a solid choice.

Variable annuities can provide many benefits; however, make sure you understand exactly how they work.There are two types of annuities sold in America, those sold by insurance agents, fixed annuities, and those sold by security licensed agents, called variable annuities.Variable annuities and fixed annuities are very different creatures. Fixed annuities earn a set rate of interest for a specific period. Fixed annuities have almost no fees (some riders may have a fee) and no expenses. What you earn is what you get.Variable annuities invest your funds in separate accounts (subaccounts) that invest in securities such as stocks and bonds, etc. Each separate account will offer specific investment objectives, and you select the accounts that will best help you reach your goal.Here are specific points to understand before investing in variable annuities:No guarantee of principal; your account can gain and lose value. Variable annuities have a stock market risk (and reward). Fees, a variable annuity charges fees for the contract, administration fees, fees for managing your money, and if you have chosen an additional rider, a fee for it.Here is an example of possible fees associated with variable annuities; these are merely examples; your actual fee schedule is located in your prospectus:
  • Mortality and Expense fee of 1.25%
  • Administration fee .15%
  • Sub-account management fee (varies) .50% to 2.00%
  • Income rider fee (varies) .50% to 2.00%
  • Death benefit enhancement fee varies
A reliable source for more in-depth information about the Pros and Cons of Variable Annuities can be found at this link: penalties can be lengthy, some as long as five to ten years. Make sure you fully understand your contractual access to your funds.

Like all investment vehicles, variable annuities have their place and possibly could be your choice, make sure you understand the moving parts and the fees associated with them.

Philip Richardson picture

Philip Richardson

The Richardson Group

7105 West 44th Ave.

Denver, Colorado 80033

(844) 741-7233

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