Issue link: https://resources.envestnet.com/i/1527488
Annuities as an Asset Class for Fee-Based Advisors l 31 © Envestnet 2022 Death Benefits The standard death benefit for a deferred annuity is the greater of the contract value of any remaining assets at death, or the total premiums paid less distributions received by death. It is provided to the beneficiary. In addition to optional GLWBs (also called living benefits), deferred annuities also offer optional death benefit riders that create an opportunity for more than the standard death benefit. One should look carefully at these as they could be counterproductive for those focusing on getting the most guaranteed income from their variable annuity. For instance, a common death benefit rider could support a death benefit equal to the full value of the annuity premiums if at least one dollar remains in the contract by an advanced age. One must consider whether it is a wise choice if the focus is otherwise placed on maximizing the spending power afforded by an income guarantee, which can involve spending down the contract value completely to trigger the lifetime income protection. Nonetheless, retirees may consider these optional enhanced death benefits on deferred annuities as an alternative to life insurance for funding legacy goals. Deferred variable annuities generally have several types of ongoing fees. 1. The first relate to the underlying funds expenses that would be included with any mutual fund investment. 2. The second type of fee relates to mortality and expense charges for the insurance company. 3. A third type of fee that may exist in the short run are contingent deferred sales charges (or surrender charges) for those seeking non-lifetime distributions above the allowed levels in the early years of the contract. Annuities as an Asset Class for Fee-Based Advisors l 31 © Envestnet 2022