No-Load Variable Annuity
(Your guide on no-load variable annuities)
Written by
Jeff Green has held a variety of sales and management roles at life insurance companies, Wall street firms, and distribution organizations over his 40-year career. He was previously Finra 7,24,66 registered and held life insurance licenses in multiple states. He is a graduate of Stony Brook University.
Uncle Sam wants us to save for retirement. That’s why annuities have special features and tax benefits. Variable annuities have many valuable features to protect retirement assets. Of course, nothing in the investment world is free, and these features come at a cost.
What if you just want the tax benefits of variable annuities without the other features? There are some no-load low-cost alternatives available.
Contact a local independent insurance agent. They can help you decide if a variable annuity is right for you.
How Much Do Variable Annuities Cost?
Typical variable annuities have four types of charges: Mortality and expense, investment manager, administrative, and surrender. These charges are calculated as a percentage of the account value. Here’s an example of the charges in a typical variable annuity, including popular additional benefits
| Mortality & Expense | Investment Manager | Surrender Charges | Rider Charges | Total |
| 1.1% | .1% - 2% | 7%, 6%, 5%, 4%, 3%, 2%, 1% | 1.45% | 1.2% - 4.55% |
How Do No-Load Low-Cost Variable Annuities Work?
Low-cost variable annuities have the same basic features as other annuities in the market. The difference is that they usually do not offer the optional benefits found in other variable annuities.
Low-cost variable annuities typically have no surrender charges, and very low mortality and expense and investment manager charges. Here’s an example
| Mortality & Expense | Investment Manager | Surrender Charges | Rider Charges | Total |
| 0.25% | .1% - 2% | 0 | 0 | .35% - 2.25% |
Advantages of No-Load Low-Cost Variable Annuities
- Tax control: Favorable tax treatment is a benefit that all annuities enjoy. Growth is tax-deferred.
- Asset allocation: Transfers between subaccounts don't trigger a taxable event. Rebalancing your portfolio doesn’t have tax consequences.
- Liquidity: No-load low-cost variable annuities usually don’t have surrender charges. They are 100% liquid. Early withdrawal penalties and ordinary tax on gains still apply.
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What Are the Disadvantages of No Load Low Cost Variable Annuities?
No-load low-cost variable annuities don’t offer the protections of living benefits. The investment selection may be limited to proprietary mutual fund offerings.
No-load low-cost variable annuities still have charges and expenses.
Should I Buy a Low Cost Variable Annuity?
A no-load low-cost annuity can be a good alternative if:
- You don’t want the living benefit protections offered by other variable annuities.
- You rebalance your portfolio on a regular basis.
- You are satisfied with the investment choices.
- Tax control is important to you,
Get Annuities from the Experts
Our independent agents shop around to find you the best coverage.
Why Do It Yourself?
Variable annuities can be an important part of your retirement plan. While they have many features and benefits, they are not for everyone. Talk to your independent insurance agent. They can help you decide if a variable annuity is right for you.
The Advisors Guide To Annuities John Olsen
Vanguard variable annuity prospectus
Fidelity personal retirement annuity prospectus