Variable Annuity Rates

Since variable annuity rates change because they allow the contract owner to invest in mutual fund subaccounts, most people don’t consider how different interest rates can affect the performance of this type of annuity. The list of variable annuity rates below is very general and touches on several additional provisions that may require further explanation, so please do not hesitate to Contact Us.

 

Fixed Rate- Many, but not all, variable annuities offer a fixed rate option in addition to the available funds within the contract. The fixed rate option in a variable annuity is exactly like a fixed annuity as the rate stays constant throughout the term. At any point you have the option to move any amount of assets to and from the fixed rate account. This offers the opportunity to capture profits and relieve the strain of fees on the overall account.

 

Death Benefit- Most variable annuity contracts offer an optional death benefit. In many cases the principle investment is guaranteed to be paid at death if the contract has lost value. Other contracts offer certain enhanced death benefit provisions. The first is a high-water mark that captures the highest asset value to be paid at death if the contract value has retracted somewhat. Another option is a guaranteed annual percentage increase regardless of account performance.

 

Guaranteed Income Growth Rate- One of the more popular addition to variable annuities in recent years is the opportunity for guaranteed income regardless of account performance. With this option, the account value will fluctuate with the market while the income benefit is guaranteed to grow at all times. This affords the contract owner of some level of certainty as to what level of retirement income to expect.

 

Payout Rate- When taking income from a variable annuity, payments will be subject to a specified rate. In cases where income is guaranteed to last for a certain number of years, the rate will be identical for all annuitants. If income is guaranteed to last for life, the payout rate will depend on the age of the contract owner and joint annuitant if any.

This constitutes a general list of the available variable annuity rates that you may find in a contract. Any additional terms for some of rates you may find when looking at a specific contract will relate in some way to the list above. 

 

Please remember that variable annuities are complex contracts and this page does nothing more than explain the rates associated with the product. All of the points above touch on details of a variable annuity contract that require greater explanation for proper knowledge before purchase.

 

Refer to additional information on this site for more detail on the inner-workings of variable annuity contracts. If you are considering the use of a variable annuity for retirement income planning be sure to seek the advice of an unbiased professional. The Annuity Report is a great place to start… sign up below and you can learn a lot more about variable annuity rates specifically, and annuities overall.