Annuity FYI Visitor Blog

In “AXA Equitable Launches Variable Annuity With Dual-Account Investment Platform,” a staff reporter at Insurance Business Review describes AXA’s new product.  AXA Equitable Life Insurance Company says that their new variable annuity gives a greater selection of investment portfolios and protection from the downside.  Variable annuities across the market are changing after losing steam in the recent financial crisis.  Retirement Cornerstone is their new dual-account investment platform.  It is a tax-deferred platform supporting two accounts that are interactive.  The first focuses on maximizing the performance of your investments by using money managers.  The second account is optional and simply focuses on retirement protection.

The account focused on long-term accumulation gives the choice of over 90 different investment portfolios with different investment styles and asset classes.  The account with downside-protection has a guaranteed income benefit option which invests in index portfolios and asset allocation.  The Retirement Cornerstone has what AXA believes to be one of the best annuity rates available for similar products.  Their roll-up rate is one point higher than the 10-year treasury rate average and is updated annually.  The dual-account platform has many tax benefits including tax-free transfers among portfolios which helps investors build lifetime income and respond to changes in economic conditions.  AXA believes that their new annuity product is a unique response to the past market turmoil which allows investors to build up their cash and protect it in the future.

No-load annuities are annuity products where investors are not charged commission fees because the investor controls the account.  During this tough economic climate there is an increased interest in these no load annuities.  Annuity FYI has added a section on these no-load variable annuities to the Compare Annuities section on its website explaining the product and listing the most competitive options out there for investors.  No-load variable annuities are usually sold to investors directly but can sometimes be purchased through brokers as well.  There are some fees associated with the product, but those fees are significantly less than load annuities and some load annuity fees are nonexistent with the no-load annuities.

One benefit that investors really like about no-load annuities is that they do not have surrender charges if you need to withdraw some money unexpectedly.  Of course you can still have penalties associated with the age you withdraw and tax gains.  The best no-load annuities have the same Guaranteed Income Benefit and Death Benefit options as loaded annuities.  One of Annuity FYI’s favorite products right now is Ohio National’s ONcore Wrap No Load Annuity.  It has both of those riders included.  No-load annuities are not right for every investor.  Since you are not paying commission to a broker, you are not getting the one on one advice and support associated with loaded annuities.  The products are best for investors that know how to monitor their own annuities and choose to do that in order to lower fees.

In The Coloradoan, James Watt stresses the importance of choosing your annuity plans wisely in “Financial planning: Properly chosen annuities offer lifetime benefits.”  While it’s true that there are multiple facets to understand about annuities, unfortunately they are all too often misunderstood products.  When the annuity and the purchaser are matched properly, annuities can provide income over your lifetime.  Variable annuities have changed significantly over the past fifteen years and while they are more complex, they are much more useful and beneficial to the purchaser.

Their 4 more popular features are summarized here.  A guaranteed minimum income benefit offers lifetime income at a guaranteed rate.  With a minimum income withdrawal guarantee, the guaranteed minimum withdrawal benefit lasts for a predetermined fixed time period.  A guaranteed minimum accumulation benefit guarantees that you will receive the amount of your original investment at the very least, at some point in the future.  The advanced live delayed benefit delays the benefits you receive until an older age that is predetermined at purchase.

Annuities are great tools to cover the income gap: the amount of money to cover your needs in retirement versus the amount of money you will have coming in from social security or retirement plans.  401k annuities and other annuity purchases and rollovers can make the income gap nonexistent.  There are many tools available to estimate how long you will live and how much income you will need coming in throughout retirement.  Having a guaranteed income that protects against longevity risk without worrying about S & P 500 declines are the main benefits of an annuity.

There are a few factors to consider when weighing your option of annuities for retirement income.  Fixed and variable annuities are the two main types offered.  With a fixed annuity, you receive interest based on contract terms with the insurance company where you purchased the annuity.  You then receive payments over the time frame specified: a certain number of years, your life, you and your spouse’s life, or your life with a minimum amount of years included.

You receive payments the same way with a variable annuity, but instead of an interest rate base, your annuity is based off of the economic market performance.  If you are worried about a possible market decline, you can purchase guaranteed minimum benefit riders for your variable annuities.  Checking the financial rankings strength of insurance companies before purchasing annuities from them is also a crucial step for securing your monthly payments.  Market risk, length of payments, and finding solid insurance companies are a few of the decisions to make when using annuities for retirement income.

Following up on yesterday’s post on Matt Ackermann’s article, Axa Equitable (the third largest provider of variable annuities) is an example of the rise in variable annuity rates and simultaneous decrease in their benefits.

Last month, Axa’s variable annuity product with a living benefit has had its roll-up, which is its guaranteed minimum rate of return, reduced to by 1 percent to 5%. Meanwhile, fees were increased to 85 basis points (a 5-point rise). This is after another adjustment in November that saw fees increase by 20 basis points with a 0.5% decrease in its roll-up.

Always remember to compare annuity rates when looking to invest!