Among other disadvantages may be the following:
- With fixed annuities (deferred or immediate), inflation can erode the value of the locked-in fixed payments.
- If an annuity is provided without sufficient analysis of the client's comprehensive needs, the owner may incur withdrawal charges from the current annuity, while being penalized for premature withdrawal charges. This includes transfers to a beneficiary because of death of the contract owners.
- Variable annuities have an average annual 1.3 percent charge against the assets, plus a $27 annual administration charge for "mortality and expense charges." This is in addition to the underlying investment fund charges. According to the article, "Are Variable Annuities Right for Your Client?" in the January 2003 issue of the Journal of Financial Planning, this creates a five- to 15-year break-even period for those highly taxed individuals, depending upon the amount of M & E charged and the individual's tax rate.
Back to Top | Next
Ohio National is not affiliated with, nor does it endorse or sponsor, any particular prospecting, marketing or selling system.
