The basics of variable annuities

By Steve Savant

Ash Brokerage Corporation


The fundamental characteristics of variable annuities are that they are a security, and their separate accounts are comprised of equity, bond and cash investments. Those separate accounts have management fees associated with them. Many variable annuities have income or death benefits riders as well as mortality charges. All these items comprise the cost of a variable annuity. The question then becomes whether the expenses are valued at the benefits of the contract. Before the market meltdown of 2008, many variable annuities had high income crediting rates; after the market pullback, rates significantly retreated. Steve and Tim walk you through the mortality mechanics of variable annuities.