A variable annuity is comprised of professionally managed portfolios that vary in both investment objectives and representative holdings. If you are working with a qualified investment advisor or registered representative, you may allocate your purchase payments across any number of these portfolios in whatever percentage you choose, with regard for your financial objectives and tolerance for market risk. Taxes on earnings from these portfolios are not due until distributed, and you may transfer assets between portfolios without having to pay taxes on gains.
➢ However, because these various portfolios are managed by professional money managers, the fees you pay for each portfolio, combined with the overall M&E and administrative fees, have the potential to be quite high.
Many variable annuities also offer optional riders guaranteeing minimum annual income for a specific number of years or even for life, available for an additional fee. Annuities with optional income riders tend to have fees commensurate with the additional risks as underwritten by the issuing insurer.
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