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Variable Annuity Investors  -- Insurance Companies Add Attractive New Features

With investors now fully understanding that markets go down as well us up, a few insurance companies have added a guarantee feature to their variable annuities.  The guarantee ensures a minimum level of income regardless of the performance in your investment sub-accounts.

Here’s a hypothetical example. One insurance company for example, guarantees that when you hold the annuity to term (10 years), they will add credit a minimum interest of 6%, even if your sub-account went down in value.  So your $100,000 investment is worth $179,000, minimum.   Of course, it could be worth more if your sub-accounts appreciated by more than 6% annually. 

If you have funds now earning a low rate that you do not intend on using for 10 years, this can be a very appropriate investment because of the guaranteed income of at least 6%. And you don’t need to wait ten years to get income, you can start taking income one year after you start your annuity. 

Another new feature is “the annuity that pays its own tax.”   Many investors enjoy the tax deferral of annuities but if part or all of the annuity is left to beneficiaries, there can be a big tax bill.  So a new feature in some annuities pays an additional amount at death to cover these taxes-- from 28% to 40% on top of the accumulated annuity value. 

If you have an annuity without these features, you can exchange to an annuity that does.  Or, if you like the idea of guarantees, these new annuity features may be for you.  Locate an advisor trained with various types of annuities and who can provide advice in your local area, click here

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