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A Better Variable Annuity?


Do you own a Variable Annuity (VA)? Do you even know if you own a Variable Annuity? Over the years, we have met several people who did not know that one or more of their financial holdings was actually a VA.

Variable Annuities are insurance products (contracts), and are chock full of costs, some of which happen at the time of purchase, while others are ongoing. Surrender Charges apply a few days after the purchase, following a “free-look” period, during which the contract may be cancelled. The Surrender Charge is used to pay the salesperson’s commission for selling the VA. Surrender charges reduce the cash value of your contract until the commission is fully amortized, which is generally over a period of several years.

Internal costs include, among many others, Mortality Expense, which represents premiums on life insurance within the VA. Why do you need insurance on your own money? Easy – because, like all annuities not otherwise protected, the contract’s value upon your death is zero (remaining money is retained by the insurance company), unless of course, you insure the balance. That insurance comes at an ever-growing expense, because Mortality Expenses increase with your age.

It doesn’t have to be that way. Help is available through Van Wie Financial. As fee-only advisors, how is it we can help you with a Variable Annuity? The answer lies in an innovative product from Jefferson National Life (JeffNat). The JeffNat commission-free Variable Annuity is designed to serve the exact market in which we operate.

JeffNat has redefined the nature of the VA by accepting the fact that your money is your money, and does not need to be insured. There is no Mortality Expense in the contract, and JeffNat charges only $20.00/month Administrative Fee. The cost difference generally saves the VA owner thousands of dollars over the years of ownership.

However, the low internal cost is only a portion of the benefit. Most VAs are limited to investing in company-owned mutual funds, which tend to be expensive to own and less successful than non-insurance company funds. Conversely, the JeffNat VA invests your money in the same mutual funds and Exchange-Traded Funds (ETFs) that we use as financial advisors in the non-insurance investment market. Perhaps best of all, the fee-only advisor on the account is able to advise and invest as if the funds were not in a VA.

But we are not done yet. Transitioning to the JeffNat VA is extremely painless, thanks to an IRS-approved process called a 1035 Tax-Free Exchange. With no cost to the VA owner, and with Van Wie Financial guiding the paperwork process, there is little to do other than enjoy the benefits. Perhaps the best benefit is the lifetime savings, which begins the day the JeffNat VA receives your funds from the old VA. Using the JeffNat website, we can show you the savings relative to your current VA.

Just when it might sound like it can’t get better, there is more. You, as the owner, have 100% control over the funds in the annuity, subject to IRS requirements for Required Minimum Withdrawals for IRA-owned annuities. If you own a Variable Annuity, give us a call. We will be pleased to present a comparison that may be able to save you money and hopefully improve your investment returns. You have nothing to lose.

Van Wie Financial is fee-only. For a reason.