Best Variable Annuities

If you search the Internet for “the best lawnmowers,” you get over 7 million results and 7 million different opinions.  What's the best variable annuity? It depend not only on who you ask, but when. That's because by the time you ask the question, the answer has probably changed. Insurance companies constantly change their products.

Variable annuities are retirement products, so the way to find the best value is to take a longer view. If you;re not familiar with variable annuities click here and check out these articles first.

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What Is the Best Variable Annuity To Buy?

Well, first things first. There are plenty of variable annuities on the market to choose from. Before you decide which one to buy, be clear about what your goals are. What features are important to you? Are you looking for a low-cost product for tax deferral and portfolio management? Do you want protection from down markets? If the variable annuity you're looking at doesn’t offer the features you want, the rest doesn’t matter.

Variable annuities are retirement products. They're designed to do two things, build wealth and create lifetime retirement income. They should fit into your retirement plan. If you haven’t done any retirement planning yet, that should be your first step. That said, here’s a quick review of variable annuity features:

The Best Variable Annuity Products

The best variable annuity products offer the features you're looking for at the lowest cost. The chart below shows fees and expenses to look at for comparison purposes.

Again, your objectives are important. Be sure to comparison shop the total cost as well as the features that you're looking for. Don't overlook subaccount management fees. Many variable annuities have low-cost options available.

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Variable Annuities with Living Benefits

Living benefits offer minimum income or account value guarantees, regardless of how the variable annuity subaccount investments perform.

While living benefits can be attractive, the protection comes at a cost (see chart above).

The Best Variable Annuity Companies

Companies that sell variable annuities have to be licensed as insurance companies by the states where they are selling, and registered with the SEC as investment companies.  

Out of the 773 life insurance and annuity companies in the US, 20 sell 95% of the variable annuities. That makes it a little easier to decide who to buy from.

One good thing to know is if other people are buying from this company. Are they a leader? While it doesn’t tell you about the company, it’s a good indication that financial professionals have some confidence in them. 

It’s true that Mom says, “If your friend jumped off a bridge, would you do it too?” While that’s good advice, it doesn’t apply here.

How does the company treat its customers? One way to find out is the J.D. Power consumer satisfaction survey of annuity companies. They use a rating system of "Among the Best," "Better Than Most," "Average," and "The Rest."

Here's a handy chart to show you the sales ranking, financial strength ratings, and J.D. Power satisfaction ratings (where available) of the top 20 variable annuity companies.

Claims-Paying Ability Tier

The Best Variable Annuity on the Market

And the winner is... it depends. Some products are less expensive than others. Some products have better features, and the differences can be very subtle. Just like finding the best companies, a good place to start is to look at the top selling variable annuity in the marketplace.  According to Winkintel's 3rd quarter variable annuity industry sales results report, Jackson National's Perspective II is the Number 1 selling variable annuity. Perspective II doesn't limit living benefit investment choices, as most other variable annuities do. Of course, that doesn't matter if you're looking for a low-cost option. What’s important is matching the variable annuity features to your retirement plan.

The Benefits of an Independent Insurance Agent

Variable annuities can be an important part of your retirement plan. While they have many features and benefits, they aren't for everyone. Independent insurance agents are annuity professionals. They can answer your questions and do the comparison shopping for you.