Financial Learning Center
- Individual Retirement Annuities
- Do Your Homework First
- Getting Started
- Additional Features and Options
- Equity-Indexed Annuities
- A Note about Taxes
- Are Variable Annuities for You?
Here are summaries of some additional options that are made available by some variable annuity issuers. It should be noted that this is not an all-inclusive list, and that some of these features are optional and come with an additional cost that will reduce your account value.
Guaranteed Death Benefit
Many investors are attracted by the death benefit variable annuities provide, which is based on the claims-paying ability of the insurance company that issues the contract. It means that if you die before you begin to receive income, your beneficiaries will receive, at the minimum, the amount you put into the annuity less any withdrawals you may have made. With some contracts, in fact, investment gains are locked in regularly so that your beneficiaries receive more than your investment, even if the value has dropped back down at the time of your death. (This is known as a "stepped-up" death benefit, and usually comes with an additional cost.)
The assurance the death benefit provides can provide a sense of security, and encourage you to invest in stock portfolios, thus increasing your chances of building a larger annuity value. In the same vein, the death benefit may also reassure people who are otherwise reluctant to invest in equities at all.
Living Income Benefit
IMPORTANT NOTE: Additional options for Variable Annuities are subject to qualification requirements, other limitations and the terms as offered in the prospectus.
This feature guarantees a minimum monthly payment if your investment drops in value due to poor stock market performance. Some companies offer a living income benefit that guarantees that your monthly income will never drop below 80% of your first payment.
With many variable annuities, you can take advantage of dollar-cost averaging. By making equal purchases on a regular schedule, you may end up paying less than the average price per unit for the purchase. That happens because you buy more units when the price is lower.
With a variable annuity, you can dollar-cost–average two ways:
- You can add money to your annuity on a regular schedule by making additional purchases
- You can put a lump sum into the fixed or money market account option within the variable annuity and arrange to have it moved gradually into one or more of the investment portfolios
Dollar-cost averaging does not assure a profit and does not protect against loss in a declining market. In order to use this technique successfully, you will need to continue to make purchases through periods of low price levels.
Transferring Money between Portfolios
Another major appeal of variable annuities is that you can make tax-free transfers within your account among the portfolios your annuity offers. For example, if you want to increase the percentage of your retirement savings in more aggressive growth stocks, you can shift money from a balanced or money market portfolio into the stock portfolio. Or, you might want to readjust your asset allocation from time to time. This flexibility lets you have continuing control over your retirement savings. The earnings in the sub-account you're taking money out of, which have grown tax-deferred, can be transferred, without tax, into another sub-account.
Investment and insurance products and services are offered through INFINEX INVESTMENTS, INC. Member FINRA (Opens in a new Window)/SIPC (Opens in a new Window). UniVest Financial Services is a trade name of UniBank. Infinex and UniBank are not affiliated. Products and services made available through Infinex are not insured by the FDIC or any other agency of the United States and are not deposits or obligations of, nor guaranteed or insured by, any bank or bank affiliate. These products are subject to investment risk, including the possible loss of value.