Are VA Guarantees Worth The Price?

Having said all that, should advisors be telling clients to stick with fixed annuities? There are just too many variables to provide an easy answer to that question. The client's age, desire for a single or joint and survivor annuity, purchase of an immediate or a deferred annuity, the type and number of VA guarantees desired all have to be considered.

Of course, an advisor should also keep in mind how the annuity or annuities being considered fit into the client's total financial picture.

It may be that a retired client who has considerable assets invested in stocks or mutual funds would be served best by putting a portion of those assets into an immediate fixed annuity to provide a minimum guaranteed level of income.

A younger client who does not need an income stream yet and has put aside the maximum allowed into a 401(k) or other tax deferred retirement account might be served best by a VA without guarantees with a goal of deferring taxes on its earnings.

Another client who needs an immediate income stream, but is concerned that the amount available for investing in an annuity won't provide enough income, might benefit from a VA with guarantees.

Perhaps the best way to determine if a fixed annuity, a VA, or a VA with guarantees is best for a client is to do a side by side comparison. Using all of the same variables for the products being considered, determine which type of annuity provides the client with the most benefit in the form of income stream or growth of the account balance.

Advisors benefit their clients the most by informing them about the different annuity choices available and by helping them choose what is best for their circumstances.

Kristen Falk, FLMI, FFSI, AAPA, ACS, AIAA, AIRC, ARA, is a senior writer with LOMA in Atlanta, Ga., specializing in annuities and financial planning. Her e-mail address is [email protected].