Variable Annuities: The Best Variable Annuity^# For You!

Variable annuities^# are understood as the annuity class that has the highest potential for gain. Conversely, it is also the annuity class that has the greatest risk of loss. This has been painfully apparent with market returns over the 10 or so years resulting in the bear market of 2000 through 2003 and the financial crisis of 2008 through 2010. As a result, variable annuities^# generally lagged behind bank interest rates, fixed annuities and fixed index annuities during this 10 year time period. In addition, investing outside of a variable annuity^# into a mutual fund^{^} equivalent to the variable annuity^# sub-account has produced better results than the variable annuity^# as a direct effect of higher fees that variable annuities^# have built into them. So, why would anyone choose a variable annuity^#?

Remember that variable annuities^# still have the highest potential and for those that want tax deferral with potential market gains; a variable annuity^# may potentially be their best investment. The best variable annuity^# is like finding the best mutual fund^{^}. It is impossible to know that it is the best for certain. Nevertheless, “best”  based on unique factors required from an annuity to meet a particular set of circumstances to perhaps help a retiree achieve certain financial goals. Key factors of the best variable annuity^# may center around:

• Higher independent ratings for safety concerns
• Better investment sub-accounts for growth
• Generous payouts for income needs
• More liquidity for emergency cash needs
• Shorter surrender periods or lower surrender penalties
• Additional benefits such as payouts for long-term care, terminal illness and death benefits
• Flexible income riders that allow both lifetime income and the ability to pass any remaining account value to heirs
• More investment options for higher growth potential
• A larger bonus
• Lower annual fees (typical fees are between 2% up to 5% annually)
• High water mark for income base
• Higher **guaranteed deferred growth of the income base
• Availability of the income base for a death benefit
• Joint survivor income **guarantees

 
As you can see, there are many considerations as to what is best and they are completely relative to your situation. The variable annuity^# that is best for a 70-year-old single female could be a total disaster for you and your wife. It is important to understand that no one variable annuity^# will give you everything you want. So, it is essential to prioritize your needs. List all of your preferences and needs and then prioritize them on a scale of 1-10; 1 being the least concern and 10 being the greatest. Now, start the process of comparing rates and options from top companies until you find the overall annuity of any type that is BEST FOR YOU! Utilizing a retirement planner/licensed agent once you have familiarized yourself with the basic aspects of variable annuities^# is important.

Best Variable Annuity Benefits

• Safety: Backed by highly rated state regulated insurers
• Tax Deferral: Tax-deferred growth
• Higher Return: Potential
• Greater Loss: Potential
• Life Insurance: Death payout **guarantees (some are optional)
• Liquidity: Flexible withdrawal privileges
• Unlimited Contributions, unlike IRAs and 401(k)s
• Inheritance: Pass money directly to heirs bypassing probate
• Lifetime Option: Income you can’t outlive (Annuitization or a Living Benefit Rider)

Best Variable Annuity: Characteristics

• Lump-sum or periodic contributions
• Investment options in sub-accounts to be chosen by client
• Principal and rate risk to client. Client assumes investment responsibility
• Higher rate potential based corresponding investment risk
• Moderate to aggressive growth
• -5% to +10% return potential varies with economic factors
• 3- to 10-year term
• Complex, greater potential risk
• Guaranteed retirement income; may fluctuate based on returns
• 2% to 5% annual fees
• The only annuities that require a prospectus

Best Variable Annuity Summary:

All variable annuities^# are tax-deferred, with no income tax requirement until withdrawal. This is a definite advantage over many investments like CDs, mutual fund^{^}s, stocks and bonds when considering a long term retirement investment.

A variable annuity^# investment may outperform CDs, bonds and treasuries. It only makes sense to reinvest money that would otherwise be paid out in tax over an extended period of years. In addition, variable annuities^# have several benefits that are important for retirement planning.

Question: Who should choose a variable annuity^#?

Answer: An individual that is willing to take risks for greater gain potential that also needs to utilize income for life or tax deferral.