This is an example of how the variable annuity rankings look like. Each contract is broken down to basic facts then we examine all the benefits offered and how they work. Some reviews are longer than others based on the amount of benefits offered and of course how complicated they are. The design is meant for you to be able to follow the details easily, so you can fully understand the benefits. Please remember even if a benefit ranks low it does not mean it is a terrible benefit. It simply means that compared to its peer group it is not as competitive.

N/A currently Vanguard does not offer living benefits.

This benefit will return only the account value to your beneficiaries. This means it could be more or less than the original purchase payment and it will depend upon the market value of your investments.

This benefit will guarantee the amount of your original investment back to your beneficiaries or account value whichever is greater. Any withdrawals taken from your contract will reduce this benefit on a proportionate basis, this means the withdrawal can reduce the death benefit by a greater amount than the actual withdrawal. There is a specific formula used to calculate this benefit, but it is not in the prospectus, it was supposed to be under Additional Statements of Information section B-2 but was not in my copy of the prospectus.

This benefit is available to those under the age of 69 and will guarantee the greater of the account value, original premium payment or the last stepped-up value. The additional fee will drop off after your 80th birthday. The annual step-up means that if you experience positive investment results on the contract anniversary date they will step-up the death benefit. The step-up can only increase, if you experience negative investment results the death benefit will not decline. Withdrawals will affect the this benefit on a proportionate basis, which means the withdrawal could reduce the death benefit by a greater dollar basis than the actual withdrawal amount. There is a special calculation for this that was not in my copy of the prospectus, under Additional Statements of Information section B-2, but was not in my copy of the prospectus.

2 (Below Average)

The reason for the below average ranking is the lack of benefits, lack of investment options and no living benefits or guarantees. Although the contract is cheap and offers low cost mutual funds, it shows little innovation. The only factor that saved this product from a poor rating is the low cost structure, you will pay around .70% for this variable annuity. It seems Financial planners will use this contract on a fee based basis only. If tax deferral is what you seek and you do not care about guarantees, either for yourself or your beneficiaries this contract is right for you.

The cons of this annuity, although cheap you often get what you pay for. 15 investment options by the same fund family is way below average, its actually poor. The death benefit is complicated and for the cost of it seems unreasonable and there are no living benefits. The contract, I know it was designed to be cheap, should cost next to nothing given the total lack of benefits to the consumer. Quite frankly the M&E is still too high for just tax deferral, considering there is no death benefit at all unless you select the optional benefits. I also see the fact that this product is sold primarily through fee based planners that after the fee is added, to pay the planner, the cost is not too much different than a tradition variable annuity. Also fees coming out being paid to a planner can create a tax situation for the client.

Please remember that even if an annuity ranks low it does not mean it is a bad product or benefit, it is meant to compare each contract against its peer group. Each state may have a different variation of the products presented here. Please check with each company to insure that the benefits are available in your state.