Variable
annuities
offer many optional features. Each carries a cost, so you
should look for the features you need and avoid spending money on the
ones you don’t.
It’s also smart to
compare alternatives. For example, depending on your situation, a
separate long-term care policy may be better for you than a long-term
care benefit in your annuity.
Some of the extra features you may find in a variable annuity are these:
Stepped-up death benefit:
The death benefit is usually your contributions minus expenses and
withdrawals. But a stepped-up benefit locks in investment gains
periodically so that it may provide more than you contributed.
Bonus credits:
An additional contribution — such as 3% of your own payment
— to your account. Insurers generally raise fees and extend
surrender
charge
periods to fund this feature.
Guaranteed income for life: Pays you a guaranteed minimum, even if the value of your investments falls.
Long-term care insurance: A benefit to pay for extended nursing-home care or home care.
Free-look period
All states have laws requiring a free-look period on annuities and life insurance. The free-look period varies from state to state, but gives you at least 10 days from when you buy an annuity to cancel it and get your money back without paying any surrender charges.
