Annuity Guys®

Annuity Rates, Features & Ratings: America's trusted annuity resource. Compare best options for hybrid, index, fixed, variable & immediate annuity quotes.


Helping You Create Great Results Your Retirement Deserves!



(217)753-1515
  • Home
  • About Us
    • About Us
    • Contact Us
    • Site Terms & Disclosure
    • Privacy Policy
  • FAQs
    • Most Frequently Asked Annuity Questions
  • All Annuity Guys Videos
  • Annuity Types
    • Best Annuity Reviews
    • Market Free™ Annuities
    • Choosing an Annuity
    • Deferred Annuities
    • Hybrid Annuity Choices
      • Hybrid Annuity Pros&Cons
      • Hybrid Income Riders
      • Hybrid Annuity Guarantees & Strategies
    • Fixed Annuity Choices
      • Fixed Annuity Performance
      • Better Fixed Annuities
      • Fixed Deferred Annuities
      • Fixed Rate Annuities
      • Fixed Annuity Alternatives
      • Fixed Annuity Pros & Cons
      • Fixed Annuity Negatives
    • Index Annuity Choices
      • Fixed Index Annuity Features
      • Fixed Index Annuity Performance
      • Better Fixed Index Annuities
      • Fixed Index Annuity Alternatives
      • Fixed Index Annuity Pros & Cons
      • Fixed Index Annuity History
      • Fixed Index Annuity Negatives
    • Immediate Annuities
      • Immediate Variable Annuity
      • Immediate Fixed Annuities
    • Variable Annuities
      • Variable Annuity Features
      • Better Variable Annuities
      • Variable Annuities Disadvantages
      • Variable Annuity Alternatives
      • Variable Annuity Negatives
      • Variable Annuity Performance
    • Pre-Issued Annuities™
      • Hybrid Annuities versus Pre-Issued Annuities ™
    • Annuity Glossary
  • Articles
    • How Do MarketFree™ Annuities Work?
    • Are Annuities Safe?
    • Living Benefits
    • FIA Performance
    • Beware of FIAs?
    • Annuities & Retirement
    • Annuities & Estate Tax
    • Rollovers & Annuities
    • Annuities & Tax
    • Charity & Annuities
    • The Lost Decade
    • Best Annuity Videos
    • Social Security Benefits
  • Calculators
    • Retirement Planning Calculator — Basic
    • Retirement Shortfall Calculator — Basic
    • Immediate Annuity Calculator & Quotes
    • Fixed Index Annuity Calculator & Fixed Annuity Calculator
    • Variable Annuity Calculator & Hybrid Annuity Calculator
  • Blog
    • Annuity Guys® Weekly Annuity Video Blogs
  • Get Annuity Guys Help
    • Request Annuity Guys’ Planning Help Today
You are here: Home / Annuity Types / Variable Annuities / Variable Annuities Disadvantages

Variable Annuities Disadvantages

Today's Top Ten Fixed Annuity Rates (MYGA)

ALL rates are continually subject to change and accuracy is never guaranteed since rates and features change frequently. Rates are provided for conceptual and educational purposes only. RATES SHOWN ARE NOT A SOLICITATION.
 

Deferred Variable Annuity Disadvantages

One of the recent comparisons and complaints leveled at both variable annuities# and many employer-sponsored plans are the high fees that tend to cut the overall return and growth of the retirement investments. From 1999 through 2009, variable annuities# have generally not fared well based on a down stock market and not so well against market index funds, since variable annuity# fees are typically at least a couple of percents higher. An approximation of fees that are customary on variable annuities# are as follows: Administrative: .25%; Mortality: .75%; Income Rider: .75%; Enhanced Death Benefit: .75%; Underlying Investment Expense: 1.5%. As you can see, minimum fees on a stripped out variable are around 2% and a fully featured variable annuity# may run as high as 5%. The problem with fees is obvious. If your investments are down 20% and you add fees, you are down about 25%. So fees actually would comprise around 20% of your loss, which does a real number on your principal. In down markets the equation does not work well for variable annuities#.
 

**Guarantees, including optional benefits, are backed by the claims-paying ability of the issuer, and may contain limitations, including surrender charges, which may affect policy values. During this segment, Dick and Eric are referring to Fixed Annuities unless otherwise specified.

Review 3-Best Retirement Annuities for Your
GROWTH, INCOME & SAFETY!

Deferred Variable Annuity vs. Deferred Fixed Annuity

So, what is the distinction between variable deferred and fixed deferred? It is very simple: Fixed is when the insurance institution assumes the risk for your principal and accumulation and variable is when you assume the risk for the underlying investments, principal and accumulation. Fixed annuities normally have minimal or no fees and their very nature allows to principal or accumulation.

Deferred Variable Annuity Disadvantages

  • Unsuitable investment advice and planning
  • Term commitment over several years
  • High surrender fees
  • Some variable annuities# do not allow additional contributions
  • Deferral in variable annuities# allows the value of the annuity to increase or decrease
  • Exposure to loss of principal
  • After a deferral period, a variable annuity# may or may not produce more income
  • Variable deferred annuities can be annuitized providing a lifetime of income; however, income will fluctuate based on underlying investments
  • Variable deferred annuities are typically invested in the securities market and the client assumes the market risk
  • Deferred variable annuities# are first **guaranteed by the claims paying ability of the insurer. The underlying invested assets are owned by the client and are not at risk of forfeiture if the insurer defaults
  • Variable annuities are not backed by the SIGA (State Insurance Guarantee Association)
  • High fees, 2-5% of the annual account balance is typical

Disadvantages of Deferred Variable Annuity Summary

All deferred variable annuities# enjoy tax deferral with no income tax requirement until withdrawal. This may be an advantage over many investments like CDs, mutual fund^s and securities oriented-investments when considering a long term retirement plan.

A long term variable annuity# investment may be able to outperform CDs, bonds and treasuries. Reinvesting money that would otherwise be paid out in tax over an extended period of years is always an advantage. In addition, deferred variable annuities# have several benefits that may be beneficial for retirement planning.

 

Question: What investment choices are available in a variable annuity#?

Answer: The choices are limited by the carrier and can be changed or removed without further notice. It is important to go with a variable annuity# that offers sound investment choices that match your investing criteria; however, the insuring company has the right to change those choices at any time it sees fit.

346
SHARES
ShareTweetGoogleLinkedinPinterestSkypeStumbleuponTumblrDeliciousDiggRedditMail

 

Empowering Annuity Reference Book

 
DOWN-LOAD NOW - FREE!
  • Annuity Guys Reference Book - 250 pages of Annuity Facts

  • "The New Retirement"
    Annuity Reference Book 
    Free Instant Download
  • Confidential - Easy Opt Out
  • This field is for validation purposes and should be left unchanged.

 

  • Five Early Annuity Surrender Options

    Five Early Annuity Surrender Options

    There may be 50 ways to leave your lover, sings Paul Simon! And, there are at least five ways to …Read More »
  • Five Common Annuity Regrets to Avoid

    Five Common Annuity Regrets to Avoid

    Most of us have a few regrets in life… but seriously – annuity regrets???Perhaps we have gone too far as …Read More »
  • Never Place an IRA in an Annuity? Wrong!

    Never Place an IRA in an Annuity? Wrong!

    One question that seems to come up on a regular basis is “should I use my IRA/401k dollars to purchase …Read More »

Revealing Fun Video: Fiduciary Advisors Vs. Annuity Salesmen
MUST KNOW FACTS 90% of
ANNUITY ADVISORS AVOID TELLING!
  • *FIDUCIARY RETIREMENT REVIEWS
    Second Opinions Improve Retirements
     
    "For Your Retirement's Success"
     Choose a *Fiduciary Advisor who gives you Full Disclosure of Cost & Selection.
     
    Material Fact 1:
      About 90% of advisors ARE NOT REQUIRED by law to do what is best for their clients!
     
    Material Fact 2:
     Fiduciary Advisors ARE REQUIRED by law to do what's best for their clients! 
     
      Hence, clients of a fiduciary can know that their advisor chose the highest legal standard required by law to work strictly for their highest good.
     
     We estimate Fiduciaries are less than 10% of total U.S. financial service providers. Fiduciaries are held to the highest client legal standard of financial planning and investment advice.
     
     The other 90% are sales oriented advisors, brokers, bank reps, registered reps. & insurance agents, selling products on a much lower suitability legal standard, not necessarily what's best for their client!
     
       Fiduciaries also must disclose conflicts of interest that could potentially bias their advice, such as; selling products that pay them higher commissions having higher fees or costs, and their lack of investment product access limiting their client's opportunities, to name a few.
     
    Choosing your advisor can have
    "The Largest Single Impact on
    Your Retirement's Success or Failure"


  • What are Hybrid Annuities?

    What are Hybrid Annuities?

    Hybrid annuities, also referred to as hybrid income annuities, are essentially a type of annuity contract that allows the account …Read More »
  • Are Annuities Best for Income or Growth?

    Are Annuities Best for Income or Growth?

    You have heard the old saying, “you can’t have your cake and eat it too!” But what if you could?Retirees …Read More »
  • Is a Pre-Issued Annuity right for you? – Part 2

    Is a Pre-Issued Annuity right for you? – Part 2

    This is a two part blog on Pre-Issued Annuities. In part 1 we examined some of the reasons why someone …Read More »
  • Top Ten Fixed Index Annuity Questions to ask Before Purchasing!

    Top Ten Fixed Index Annuity Questions to ask Before Purchasing!

    And now, here’s your Fixed Index Annuity TOP TEN Countdown… while we are definitely not the Casey Kasem version of counting down the top …Read More »
  • Choosing a Great Retirement Advisor for Financial Planning

    Choosing a Great Retirement Advisor for Financial Planning

    Remember the yellow page ads from years ago – “Let your fingers do the walking, it’s a snap!”The yellow pages …Read More »
  • OutCome Based Planning™ for Retirement

    OutCome Based Planning™ for Retirement

    We practice and recommend a “Holistic – OutCome Based Planning™ process when considering annuities.” This approach has the effect of …Read More »
  • Fixed Index Annuity Returns Reviewed

    Fixed Index Annuity Returns Reviewed

    Dick and Eric take a look at the Wharton study and what it means for anyone considering a fixed index …Read More »
  • Who Should Choose Annuities?

    Who Should Choose Annuities?

    What type of individual chooses to purchase an annuity?Is there a stereotypical annuity enthusiast? Maybe not – however, we know …Read More »

View Our Newest Videos! Subscribe Now
  • Annuity Guys Videos - Annuity Answers
  • New Annuity Guys Videos
    Our Entertaining & Informative
     Saturday Morning Video Blog
  • Timely Retirement & Annuity Issues - Easy Opt Out
  • This field is for validation purposes and should be left unchanged.


  • What do Annuities Really Earn? No Hype…

    What do Annuities Really Earn? No Hype…

    Apples and oranges – what do they have in common? Both are fruits!Why would we start a discussion about annuity earnings …Read More »
  • Is it Unfair to Compare Annuities to Investments

    Is it Unfair to Compare Annuities to Investments

    Is comparing annuities to investment choices a mistake? A recent Market Watch article stated that was just one of the …Read More »
  • Reduce Your Concern of Outliving Retirement Dollars!

    Reduce Your Concern of Outliving Retirement Dollars!

    Have you ever made a trip to the grocery store where you picked up a few items, walked up to …Read More »
  • Can Annuities Eliminate or Reduce Retirement Failure?

    Can Annuities Eliminate or Reduce Retirement Failure?

    The biggest challenge to a successful retirement is living too long and running out of money – regardless of how …Read More »
  • Annuities versus Securities

    Annuities versus Securities

    When you build a house, you don’t start with the roof – you start with the foundation. For many retirees annuities help …Read More »
  • Choosing Annuity Potential or Income **Guarantees

    Choosing Annuity Potential or Income **Guarantees

    Have you ever heard the quip “It can be hard to remember that the objective was to drain the swamp …Read More »
  • Are 8 Percent Annuity Returns in 2025 Too Good to be True?

    Are 8 Percent Annuity Returns in 2025 Too Good to be True?

    Annuity Salesman asks:  “How would you like an eight percent compounded return? -Guaranteed!” Misled customer replies, “Where do I sign-up?”Is …Read More »
  • 28 Risks Retirees Face – Part 2

    28 Risks Retirees Face – Part 2

    What are the risks everyone will face in retirement? We recently received a list of retirement risks prepared by the …Read More »
Get Newly Released Annuity Guys® Videos on Saturday Mornings
  • Annuity Guys Videos - Annuity Answers
  • New Annuity Guys Videos
    Our Entertaining & Informative
     Saturday Morning Video Blog
  • Timely Retirement & Annuity Issues - Easy Opt Out
  • This field is for validation purposes and should be left unchanged.


  • Tax Saving Income Tips

    Tax Saving Income Tips

    As we approach an almost insurmountable debt load likely increases in tax is may be inevitable, we thought it may …Read More »
  • When is Zero Good News for Hybrid Annuities?

    When is Zero Good News for Hybrid Annuities?

    Have you called someone a “good-for-nothing” and thought you were being derogatory?With hybrid annuities, being good for nothing in the bad …Read More »
  • Hybrid Annuities as an Inflation Hedge

    Hybrid Annuities as an Inflation Hedge

    Inflation – this one word strikes terror in the hearts of many retirees on a fixed income.Never to fear, we have a cost of …Read More »
  • Annuities versus Securities

    Annuities versus Securities

    When you build a house, you don’t start with the roof – you start with the foundation. For many retirees annuities help …Read More »
  • Reduce Your Concern of Outliving Retirement Dollars!

    Reduce Your Concern of Outliving Retirement Dollars!

    Have you ever made a trip to the grocery store where you picked up a few items, walked up to …Read More »
  • Choosing a Great Retirement Advisor for Financial Planning

    Choosing a Great Retirement Advisor for Financial Planning

    Remember the yellow page ads from years ago – “Let your fingers do the walking, it’s a snap!”The yellow pages …Read More »
  • Identifying Unethical Annuity Advisors

    Identifying Unethical Annuity Advisors

    Practicing as a financial advisor is an honorable profession that is dishonored when its practitioners employ abusive and deceptive sales …Read More »
  • Are Fixed Index Annuities Best for Retirees?

    Are Fixed Index Annuities Best for Retirees?

    “Sometimes you eat the bear; sometimes the bear eats you.” – AnonymousHow would you like to make a portion of …Read More »
  • China Tariffs – Market Corrections – Effects on Index Annuities

    China Tariffs – Market Corrections – Effects on Index Annuities

    Market’s are so unpredictable that “the experts” are frequently – DEAD WRONG! Unfortunately, you rarely here about their failed predictions, …Read More »
  • Annuity Rates, Caps and Fees

    Annuity Rates, Caps and Fees

    “What are your best annuity rates?” This is how about 50% of our phone calls from website visitors start out after they visited AnnuityGuys.org .As independent advisors, fortunately, …Read More »

 

Empowering Annuity Reference Book

 
Start Reading Now - Instant Download
  • Annuity Guys Reference Book - 250 pages of Annuity Facts

  • "The New Retirement"
    Annuity Reference Book 
    Free Instant Download
  • Confidential - Easy Opt Out
  • This field is for validation purposes and should be left unchanged.

 
Comprehensive Site Terms and Disclosure | Privacy Policy | Copyright © 2025 Annuity Guys®


  ** Guarantees, including optional benefits, are backed by the claims-paying ability of the issuer, and may contain limitations, including surrender charges, which may affect policy values. Annuities are not FDIC insured and it is possible to lose money.
Annuities are insurance products that require a premium to be paid for purchase.
Annuities do not accept or receive deposits and are not to be confused with bank issued financial instruments.
During all video segments, Dick and Eric are referring to Fixed Annuities unless otherwise specified.


  *Retirement Planning and annuity purchase assistance may be provided by Eric Judy or by referral to a recommended, experienced, Fiduciary Investment Advisor in helping Annuity Guys website visitors. Dick Van Dyke semi-retired from his Investment Advisory Practice in 2012 and now focuses on this educational Annuity Guys Website. He still maintains his insurance license in good standing and assists his current clients.
Annuity Guys' vetted and recommended Fiduciary Financial Planners are required to be properly licensed in assisting clients with their annuity and retirement planning needs. (Due diligence as a client is still always necessary when working with any advisor to check their current standing.)



  # Investors should consider the investment objectives, risks, charges and expenses of a variable annuity and its underlying investment options. The current prospectus and underlying prospectuses, which are contained in the same document, provide this and other important information. Please contact an Investment Professional or the issuing Company to obtain the prospectuses. Please read the prospectuses carefully before investing or sending money.


  ^ Investors should consider investment objectives, risk, charges, and expenses carefully before investing. This and other important information is contained in the fund prospectuses and summary prospectuses, which can be obtained from a financial professional and should be read carefully before investing.


  ^ Eric Judy offers advisory services through Client One Securities, LLC an Investment Advisor. Annuity Guys Ltd. and Client One Securities, LLC are not affiliated.


346 SHARES