Best Variable Annuities for 2018

Best Variable Annuities for 2018
Here are the guidelines on variable annuities that will help you decide if it can be an investment option for you. We will also be discussing the best annuities of 2018.
WealthHow Staff
Last Updated: Mar 19, 2018
What is so great about a variable annuity, that several people are preferring it as a form of retirement planning and a general investment? The structure of a variable annuity is such that it corresponds to a general life insurance, that provides a payback or a return on investment.

However, there is a subtle line of differentiation between the two. Since choosing the best annuity is no doubt quite difficult, let's understand the specifications, features, and merits that tend to highlight the best of annuities.
Definition and Basic Mechanism of Variable Annuities
Annuity In A Nutshell
Like any other investment options such as a mutual funds, insurance with repayment benefits and regular investment funds, annuities consist of a set of annual or periodic payments made by the annuitant or annuity owner to the insurer or annuity company.

The annuity company then invests the money into several different reliable and well analyzed destinations and resources to obtain solid and concrete returns. These returns are then repaid to the annuitant periodically, within regular intervals.
Why Do People Go For Annuities?
What makes, most of the annuities into quasi-life insurance policies, is the death benefit that is provided to surviving relatives, to secure their financial future.
Types Of Annuities
Variable and fixed annuities are two prominent types of annuities. The major difference between the two is the returns that are provided. A fixed annuity provides a fixed and predetermined rate of return.

On the other hand, variable annuity basically has a variable rate of return, which explains its name. The death benefit of the variable annuity is however, predetermined and fixed.
How to Find the Best Variable Annuity
So, how does one ascertain whether a certain variable annuity is the best one or a really good one?
How to Check for the Best Annuity
Calculate the rate of 'Return Over Investment (ROI)', which is basically the percentage ratio between amount received as return and the amount invested. However, in case of variable annuities, it is not possible, owing to the fact that such an annuity does not have fixed return.

Hence, one of the best ways to analyze is to take into consideration, the features that the annuity offers.
Here the features and some of the annuities offering some such features have been discussed. The annuities that have the said features and offer substantial benefits are included in the explanation of feature analysis.
Living Benefits
From the point of view of annuities as an investment, a Guaranteed Minimum Income Benefit (GMIB), is of critical importance. In a variable annuity, the GMIB is a fixed amount that is paid by the company to the annuitant. The remaining amount that is paid over the investment is variable.
Companies That Provide Great Guaranteed Minimum Income Benefit
Here are the best companies that provide the best guaranteed minimum income benefit -
  • Axa Equitable's GMIB: Guaranteed Minimum Income Benefit Rider (Accumulator Series) and GIB: Guaranteed Income Benefit Rider (Retirement Cornerstone Series)
  • MetLife's GMIB Plus: Guaranteed Minimum Income Benefit Plus Rider
What's A Lifetime Withdrawal Benefits (LWB's) ?
As per this benefit, you will be able to withdraw some percentage/portion from the invested cash balance, without sacrificing your interest. The withdrawal beyond a certain limit is not permitted and would affect the returns.

Now, you can consider the withdrawal amount, proportion and percentage as per your convenience. However, the withdrawal facility is not provided for all annuities. It must also be noted that in some cases, withdrawal affects the death benefit amount.
Bonus
Bonus is the amount that you receive over the GMIB. Now this rate of return, should be considered rather seriously, as this is basically the yield of your investment.
Companies And Annuities That Provide A Really Good Bonus Over GMIB
Some companies and annuities that provide a really good bonus, include:
  • Allianz Life
  • American Equity
  • Phoenix Life
  • Midland National
  • Athene Life
Surrender and Load Charge
Things to be Kept in Mind at Surrender and Load Charge
The most important thing is the charge for loading and withdrawing the annuity. The load and surrender are small charges that one needs to pay either while taking up the annuity or while stopping it. The rule of thumb is, the lesser this charge is, the better is the annuity.
Death Benefit
Now even if you are investing to make money, death benefits are to be considered with absolute seriousness, as such an annuity also fulfills the role of a life insurance.
Best Companies And Annuities That Provide Good Death Benefit
Here is a short list of the companies and annuities that provide decent death benefits -
  • Metlife
  • Axa Equitable
  • Lincoln
Investment Strategies and Asset Allocation
The last thing that can be considered is the investment strategy, reputation, and investment features that are included in the barrier function of the annuity company.

Now, this feature differs from company to company and it is essential to get the annuity of the company which has a good investment reputation
Choosing the appropriate variable annuity is always difficult, hence make sure that you choose the annuity, by taking into consideration the aforementioned factors.

Explore all features and benefits of a variable annuity thoroughly, before choosing one.