Variable Annuities and Variable Life Products:
Questions to Ask
Variable annuities and variable life insurance products combine
features of insurance and securities investments.
They can be an important part of your retirement and investment
plans, but it is important to make sure they are right for you.
Recently the SEC issued a report on how these products are sold.
Based on the problems we’ve seen, here are some important
questions we recommend that you ask before purchasing a variable product.
- Might I need this money in the next few years?
Variable products are long-term investment vehicles.
They aren’t appropriate if you’ll need your money in the
short term because substantial taxes and insurance company charges may
apply if you withdraw your money early.
- Do I have enough money right now to purchase this product?
Because variable products are long-term investments, it can be
dangerous to your financial health to mortgage your home in order to
purchase a variable annuity or variable life insurance product.
If a salesperson pressures you to do so, call us instead at
- Am I being urged to purchase a variable annuity or variable
insurance in my IRA, 401(k), or other retirement account?
One key benefit to purchasing variable products is the fact
that earnings on the invested money accumulate tax-deferred.
But these tax benefits are of no value if you’re purchasing
the product in your IRA, 401(k), or other retirement account because
those accounts are already tax-advantaged. Make sure that the features you’re buying are worth the
money you’re paying.
- Does the firm recommend this product to all its customers?
Everyone has different investment objectives.
Variable products are not “one size fits all.”
Be careful if a salesman recommends one product to all
customers. That may mean
the product isn’t right for you.
- What will I lose if I exchange this product? If a salesperson is urging you to exchange your variable
product for a new contract, you’ll need to compare both products
- the guaranteed death benefit of the new product may be less than
- you may have to pay a “surrender charge” to get out of the
- the new product may impose higher annual fees and a new
surrender charge, and
- the new product may impose a new surrender charge period.
more information on how variable annuities work and what you should know
before purchasing, please read Variable
Annuities: What You Should