Response: Today's question came in from Daniel from Westin Florida. The quick response to your question Daniel is to say absolutely not. This is a classic example of an advisor selling the features of an annuity trying to entice a sale and setting an expectation of safety when one doesn't exist. I'm quite certain based on the question that the discussion of fees for these "guarantees" was not part of the conversation either. I want to be perfectly clear to state that NO variable annuity offers its owner principal protection or any sort of guaranteed return. To take that a step further, many sales presentations include a discussion about either an income rider or death benefit rider which many consumers misunderstand. Both of these riders are costly additions to your expense schedule and in short an income death benefit rider guarantees your beneficiary's that they will not inherit less than your original deposit plus a nominal rate of return. Please note that this IS NOT spendable cash by you while you are alive. An income rider is a feature that provides for a "roll up" in value and a guaranteed payout for life from that "income account" NOT your cash value. There is a huge difference here. You should also be aware that if you add these riders, there are fees involved. You should know what the total cost of your annuity is before considering the purchase. I would also be asking to see the track history of the performance on contracts that include the riders to show you the net affect of those expenses.
Thanks so much for the question Daniel.
Carl Barnowski has 25 yrs. of experience as a retirement income expert specializing in principal protected annuities.