Why Variable Annuities May Not Be For You
You are being targeted by your friendly insurance/securities broker. As you may be aware, financial misconduct is one of the fastest growing industries in our country. While brokerage firms pretend that investor protection and fair dealing with customers is the “foundation” of the securities industry, abuses continue unabated. Variable annuities are often the vehicle of sales practice abuse for the elderly.
A recent article in Market Watch described “new” guarantees and “Lifetime Benefits” of variable annuity products being offered to investors. One of the popular features includes a rider, which is called a “guaranteed” minimum withdrawal benefit. However, these features and riders come with additional costs to consumers, which may outweigh any benefits and ‘guarantees’ associated with the purchase of annuities.
Some advisors believe that variable annuities are only suitable for those that can use the tax deferral features, including those still working and between the ages of 50 and 70 years of age. Most annuities have significant surrender charges, which last a number of years.
For those who seek to have tax deferral and who do not need immediate liquidity, the variable annuity with the guaranteed minimum withdrawal benefit can provide some security. However, it certainly is not for everyone!