Date posted: February 18, 2013
Annuity FYI just added a new page with information about some of the best low-cost variable annuities available right now. I thought it was important to summarize this information on the blog as well because we are constantly asked about low-cost variable annuities. Do they exist? Are they any good? Yes, there are definitely a lot of good low-cost variable annuities to be found. It doesn’t mean they are the best product for your needs just because they are low-cost, but there is a chance that they might be. Following are the six low-cost variable annuities available right that Annuity FYI believes hold good value.
- Prudential’s Premier Advisor has living income and death benefit riders that are very competitive despite its low cost. The fact that it has no surrender charges makes this variable annuity a good one for people worried that they might need immediate access to their money. The sub-account fees range from .62%-1.66%. The M&E fee is .55%, while the contract fee is $50 or 2% of the account value, whichever is lower.
- Pacific Life’s Pacific Odyssey has low ME&A fees of .40%. Death benefit and living income riders are available at a very low cost and there are not surrender charges with this product either. The sub-account fees are between .29%-1.97%.
- Vanguard’s Variable Annuity has some of the lowest ME&A fees of .295% because there is no return of premium death benefit rider. If you aren’t interested in such a rider, this product is a great way to save on fees. The $25 annual service fee is waived if your account balance is more than $25,000. There are no surrender charges with this product either. Total sub-account fees are very low, with a range of .06%-.44%.
- Ameritas’ Variable Annuity has great living income benefit riders and no surrender charges, but does not offer enhanced death benefit riders. M&E fees are .60% and sub-account fees range from .06%-4.89%. The $40 annual service fee is waived if you have at least $50,000 in your annuity.
- Lincoln Financial Group’s American Legacy III C-Share is another variable annuity with no surrender charges. Annuity FYI likes this particular product because the fees are low, especially for the competitive living withdrawal benefit riders offered. The age bands on this rider are very low for investors. M&E fees are 1.70% and sub-account fees range from .53%-1.12%. The $35 annual service fee is waived by Lincoln for account values over $100,000.
- Sun America’s Polaris Advisor III has low fees and low costs for their competitive death benefit and lifetime income riders. There are no surrender charges for this annuity either. Sub-account fees range from .72%-1.57%, while M&E fees are 1.65%. If your contract value is $75,000 or more, the $50 annual service fee is waived.
While these six low-cost variable annuities certainly aren’t the only options out there, Annuity FYI believes that they are good products for the right investors. Our experts answer a lot of questions about variable annuities and would be glad to offer help to you as well. Call or email a representative for free advice on annuity products.
Written by Rachel Summit
Follow Rachel, aka Finance Mama, on Twitter and Google+
Date posted: March 12, 2012
Vanguard recently made some positive changes to their annuity and mutual fund products, according to Forbes’ Mel Lindauer. The article, “Welcome changes at Vanguard,” highlights three important changes made by the company. First, Vanguard eliminated their Asset Allocation Fund, which allowed the fund managers to use whatever percentage of equities they felt was best. This Asset Allocation Fund had been used in Vanguard’s LifeStrategy Funds and took away the investors’ ability to manage their risk level because they had no control over their asset allocation.
There are two new annuity funds from which to choose if you have a Vanguard annuity. The new sub-accounts are the Moderate Allocation Portfolio and the Conservative Allocation Portfolio. The first has 60% stocks and 40% bonds and strives to appreciate your capital while giving you low to moderate income. The Conservative Allocation Portfolio has 40% stocks and 60% bonds. It’s purpose is maintaining your current income while providing low to moderate capital appreciation.
A Guaranteed Lifetime Withdrawal Benefit is now available with Vanguard’s annuity products. It is an option with the new Moderate and Conservative Allocation Portfolios as well as with their Balanced Portfolio. The Balanced Portfolio has been around for awhile and gives the option of 60-70% stocks balanced with 30-40% bonds. The GLWB option has been increasingly popular and Vanguard’s annuity holders are excited for this new choice. Vanguard welcomes new clients who have an annuity they’d like to transfer to one of Vanguard’s new choices.
Written by Rachel Summit
Follow Finance Mama on Twitter http://twitter.com/#!/financemama
Date posted: May 17, 2011
According to a recent survey, investors are quite uncertain with the retirement issues surrounding them and could use more help from advisors. Danielle Andrus of Advisor One says that many people are not happy with the support offered from their employer’s retirement plan in her article “Unsatisfied and Uncertain–Investors Need Advisors’ Help: Retirement Report Roundup.” Cogent Research’s study of investors found that more than half were unhappy with their current situation and need advisors’ help transferring 401k annuities and other retirement savings plans. Those who are happy with their current employer plans are three times more likely to roll their money over with the same company holding their 401k or 403b plans. Investors were most satisfied with Fidelity, Wells Fargo, Vanguard, Merrill Lynch, and Charles Schwab.
LIMRA research has found that half of pre-retirees have not even considered the possibility of outliving their income. Fewer than one third of those set to retire in the next three years actually have a written retirement plan in place. Advisors will be able to help pre-retirees and retirees make decisions to carry their savings throughout their lifetime. Annuities with guaranteed living benefits have been increasing steadily and were up 8% in 2010. With $81 billion in sales of annuities with guaranteed living benefits in 2010, the total assets of variable annuities carrying that rider went to $521 billion during the fourth quarter of last year. New annuities with these riders were introduced in 2010 by Hartford, Principle, and Protective. Our experts can help you with 401k annuities and guaranteed living benefit riders that will make your money last over your lifetime.
Date posted: February 28, 2011
Our series of Real World Scenarios continues:
The guy on the radio says to buy the Vanguard annuity, and that it is the best because the fees are so low. What should I do?
I don’t know that he said it was the best, but I’ll take your word for it. I’ve heard several people on the radio and read several newsletters making similar claims, and personally it bothers me when I hear it. Vanguard is a very good company in my opinion, and second-to-none when it comes to indexed funds (i.e. S&P’s 500 Index, Mid Cap Index, etc). I say second-to-none because all indexed funds are essentially the same, and Vanguard’s are the least expensive.
But when it comes to annuities as with most things in life, I believe you usually get what you pay for. Many people get very caught up in fees and fail to focus on the bottom line. The cheapest is rarely the best. If someone’s rate is low and they are good at what they do, it won’t be long before their rate goes up. That’s simple supply and demand. The opposite is true also. If someone’s rate is higher and they aren’t doing a good job, they will lose business and their price will have to fall in order to attract more business. My father always said, “There’s no such thing as cheap quality.” I’ll add one more t o that: “Price is only an issue in the absence of value.” If you needed brain surgery, would you go to the cheapest doctor you could find? If you hit someone in your car and they were suing you for everything you own, would you shop for an attorney by using their hourly rates as your main criteria?
When it comes to your retirement nest egg, very few things are more important and demand more attention and careful consideration. Search for performance, fund selection, management tenure, fund features, and benefits, but don’t get overly hung-up on fees. If one variable annuity is charging 2.25% in annual fees (the industry average) and has a 5-year track record of 30% per year (net of fees), all with the same management team, and another variable annuity is charging 0.50%, but they’re averaging 20% per year net of fees, which would you rather own? Seems like a simple answer, but you may be surprised by how many people would say the latter.
Date posted: September 3, 2009
Just over a year ago Transamerica Life Insurance Company introduced the Prinicipium II variable annuity product, according to an August 25 company press release entitled “Transamerica’s Principium II Variable Annuity Continues to Gain Market Share.” The product is marketed as a lower-cost variable annuity that has ETF-based sub-accounts, is easy to understand, and offers optional benefits in line with Transamerica’s other products. Transamerica believes itself to be one of the first companies to offer lower-cost options for their investors. They see many of their competitors developing similar variable annuity offerings.
Sales have grown each month in 2009 for Transamerica’s variable annuities and they attribute much of that growth to the Principium II. Investors costs are kept low largely because of the ETF-based sub-account options. Vanguard is the ETF provider for 2 of Transamerica’s sub-account choices because they keep investor costs low and have great expertise in index management. Transamerica’s CEO believes that their lower-cost variable annuity presence is driving the company’s sales success this year.