Consider all annuity options
Annuities come in all different shapes and sizes. You may have heard of no load annuities (or as they are sometimes written, no-load annuities). A no load investment of this type is one where the individual investing money is not charged a commission fee. Annuities are not the only types of investments that can be classified as no load. Mutual funds can also be no load investments as well.
If you peruse insurance companies you will find some that sell no load variable annuities. These investments are sold on a direct basis to investors. While they can be purchased through brokers, they do not have to be. Nor do they have to be purchased through commissioned sales people. Load in the investment world means commission fee and no load therefore means the opposite.
No load annuities come with low annual expenses. The word is “low” however and not “no.” These kind of variable annuities come with management and mortality expense (M&E) fees although it is important to note that they are a great deal lower than the fees attached to load annuities. For example the M&E fees for a no load can be as low as 0.20 percent while they can be as high as 1.50 percent for a loaded annuity. The portfolio fund management fees (sub-account) tend to be similar with both types of annuities.
No load variable annuities do not have any surrender charges which means that if you require access to your funds on a moment’s notice then that is possible. On the down side if you invest in no load annuities and are under the age of 59.5 then you will have to pay a 10 percent federal excise tax as well as regular income taxes on any of the gains you make from the annuities.
With all that these no load investments have going for them you may wonder why everyone is not rushing out to invest in them. Like all other types of investments they have their disadvantages. Many of the features and riders that make annuities so popular and valuable cannot be found with the no load variety. In other words, a no load variable investment does not offer lifetime income benefits, guaranteed minimum income benefits (GMIBs), guaranteed minimum withdrawal benefits and roll-up death benefit provisions.
If you like the hands-on approach to annuities then no-load ones are for you. This is because you will not receive any type of service from a financial professional, regardless of whatever it may be. A commission fee is what pays for this and if you do not pay a commission fee then you do not get the opportunity to seek advice or guidance from financial professi
