Variable annuities are insurance contracts designed to help you reach your long-term financial goals by providing you with a way to accumulate tax-deferred retirement savings while you are preparing for retirement and a stream of income to use when you are in retirement.
When you invest in a variable annuity, the insurance company typically offers a selection of underlying mutual fund-like investments called "subaccounts." You can choose from several professionally managed and diversified variable annuity subaccounts or portfolios based on your investment objectives, comfort level with risk and length of time until you retire.
There are several key features to consider with a variable annuity.
During the accumulation phase, increases in the value of the annuity are not subject to taxes until withdrawn.
Flexible income options
During the distribution phase, you may take income from a variable annuity in a number of ways:
Guaranteed death benefit
If the owner of the annuity passes away, the beneficiary is usually guaranteed the amount originally invested, minus previous withdrawals. Additional death benefit options may be available.
Variable annuity proceeds paid to the beneficiary upon death are excluded from estate probate. However, the proceeds are subject to ordinary income taxes and estate taxes.
Fees & expenses
Most variable annuities have two types of asset-based expenses: an insurance fee and an investment management fee. Annuities also can include optional insurance fees and an annual contract fee. The sum of these fees may be higher than fees charged on other types of investments.
In addition to costs common to all variable annuities, all annuities include sales charges. A portion of the sales charge received by Edward Jones is paid to the financial advisor selling the annuity.
For additional information about variable annuities, you may want to review the Securities and Exchange Commission website at www.sec.gov/investor/pubs/varannty.html.
How we can help
Variable annuities are not suitable for everyone. We recommend variable annuities as one option for long-term investments for saving for retirement. If you're looking for additional tax-deferred retirement savings and/or guaranteed lifetime income, a variable annuity might be a good addition to your investment portfolio.
Your financial advisor can help explain the ins and outs, will work with you to review your long-term goals, and determine if a variable annuity is a good fit for you.
Variable annuities are offered and sold by prospectus. You should consider the investment objective, risks, and charges and expenses carefully before investing. The prospectus contains this and other information. Your Edward Jones financial advisor can provide a prospectus, which should be read carefully before investing.
Investments in variable annuities are subject to market risk and loss of principal. The investment return and principal value will fluctuate so that accumulation units, when redeemed, may be worth more or less than their original cost. Ask your Edward Jones financial advisor which variable annuity may be right for you.
Edward Jones operates as an insurance producer in California, New Mexico, and Massachusetts through the following subsidiaries, respectively: Edward Jones Insurance Agency of California, L.L.C., Edward Jones Insurance Agency of New Mexico, L.L.C., and Edward Jones Insurance Agency of Massachusetts, L.L.C.
Edward Jones receives payments known as revenue sharing from certain mutual fund companies, 529 plan program managers and insurance companies (collectively referred to as “product partners”). For more information see Revenue Sharing Disclosure.