We get asked all the time about what to look for in a variable annuity. We cannot give you a exact answer on that question, no one person can without knowing your exact situation. This is why we review and rate so many different contracts. This is also why we developed the Annuitizer variable annuity suggestion tool. We will give you some general tips, though.

You must define your needs. This means you need to know why and for what reason you are investing to begin with. If you are seeking long term growth and believe in the markets, than you really do not need to worry about living benefits. In this case, you would look for a contract that offers a lot of investment choices and lower fees.

You may want some type of guarantee attached to your investment. In that case, you need to know the different types of living benefits that are available to you. To know this, I would refer you to the free e-book, Living Benefits Explained. This will give you a general idea of the types of living benefits that are available and how they generally work.

After you decide what type of living benefit meets your needs, it is then time to do your homework on which company is the most competitive for of this type of benefit. You can take the hard route and try to do it yourself by searching the internet, or you can simply go to the buy now page on Annuity IQ and get the information fast and save your valuable time.

What you are looking for is a solid benefit at a reasonable cost. You have to read the small print in the prospectus to find out if there are any caveats to the benefit. We are referring to language in the prospectus that will excessively punish you for what is referred to as excess withdrawals. These are withdrawals that are over what you are allowed to take out.

Some living benefits will charge you a ton of money for a simple benefit, and if you withdraw more than you are supposed to, they will reduce your guarantee substantially or nullify it altogether. Sometimes the benefits look very similar to each other, but there are usually subtle differences that can make a big difference over all. We help you identify these differences and it has an influence on the overall rating. In other words we can identify the risks for you.

Make sure the company you decide to buy the contract from is solid. You should always check the financial ratings of the company you want to use. We, generally, would advise you to work with a company that is at least “A” rated or better. Lower rated companies usually offer slightly more attractive guarantees, but that is because you are assuming more risk when you put your money with them. The idea is to make sure the company is around to honor the guarantee in the future. We recommend that you use S&P, Moody’s, or AM Best These are rating companies that check the financial data for insurance companies. Another ratings company is Weiss Ratings, they are tough to get a high rating from.


What is generally not as important when shopping for a variable annuity.

Commissions paid to a broker. We do not factor this into our rating system, it simply does not matter to us. The commission paid to the broker is designed to compensate them for their time and advice to you, and that should never be underestimated.

In the variable annuity world, you will be hard pressed to find a variable annuity company paying over 7% in commissions to the broker/agent. Some people report commissions to be as high as 12% on variable annuities. We have never seen a company pay that high of a commission on a variable annuity, ever. The highest paying commission we have ever seen was Conseco, and they were paying 8.25%. This was when they were in grave danger of going out of business.

Cheaper does not always mean better, and more expensive does not mean it is better than cheaper contracts. People will tell you to look for a low cost variable annuity. We think they are selling you short with this recommendation. Low cost variable annuities offer little more than tax deferral, which is very important, but why pay for absolutely no protection at all?

Conversely, more expensive does not mean it beats the competition. We all like expensive cars and homes, but when it comes to variable annuities, expensive is not always good. We look hard at expenses and it is a major factor in our rating system. We can point to a lot of very expensive contracts with average or below average living benefits. We can also show you a lot of cheaper contracts that have superior living benefits.

Strike a balance with the living benefit world. Look for a variable annuity contract that offers good living benefits at a reasonable cost. This would be the mid-ground mentality and will help you in the long run. When a benefit seems too good, it probably is. Just like with credit cards or loans, don’t always fall for the hype. For example, if the average GMIB (guaranteed minimum income benefit) is paying 5% and someone offers you a 7% GMIB, that sounds too good to be true-- right? Probably, and it is probably not as good as other GMIB’s in the market place.

You have three choices when shopping for living benefits. 1. Do it yourself and search for all of the different living benefits, which will take hours of your time. 2. Just blindly take someone’s word that you are getting the best product or benefit available. 3. Use our extensive research, save your valuable time, and know exactly what is in the market place. You will know for a fact that you have the best variable annuity contract or benefit for your needs.

Annuity IQ makes it easy for you to find the variable annuity for your needs. We already have done the research and offer you the most advanced tools in this area. We do all of this for a very small fee, that could save you thousands over the long term. No other company offers the type of product that we offer, no other website delivers what we bring to the table. We have the biggest and most complete variable annuity resource center on the web. If you do not believe us, then feel free to search the net, but do not forget to book mark us first, so you can get back to the largest variable annuity site on the internet.