This is our first review of a variable annuity, the Allianz Vision Annuity. If you are like me you eyes squint and sharpen your concentration when you hear the word “variable”. As in “there are just a lot of variables” or “variable interest rate loan” or my personal favorite: “your results can vary“.
You: what do you mean by “variable”?
Me: I mean my personal favorite from above, as in “your results can vary”. Not only can the performance results of the Allianz Vision Annuity vary due to market conditions (as you would expect), but consequently the money in your account can vary too!
You: I still didn’t understand.
Me: basically what it means is that as market conditions improve your money can go up, as market conditions deteriorate your money can go down. Kind of like having your money in a stock. Up and down, up and down. Is this what you want for your retirement money?
You: so my money is in the market?
Me: essentially, yes it is.
You: that doesn’t sound very stable.
Me: it is isn’t stable. And not only do variable annuities not protect your money from market downsides as I just explained, but as a general rule-of-thumb they also have notoriously high fees when compared to most fixed index annuity products. The Allianz Vision Annuity is no exception to the high fee rule, fees in the Allianz Vision Annuity can add up to about 3% per year. So if the market goes up 8% in a year and the total fees on your annuity are 3% than your net earnings are just 5%. If the market goes down 8% in a year than you losses will be 11%!
Me: my opinion is if you still want to have all the potential upside of the market and are willing to expose your retirement money to downside risks than just open a brokerage account and buy the positions directly and avoid all the high fees. Or better yet use a strategy that gives you all the upside potential of the market, but also gives you downside protection. Shameless plug for Verus Capital Link://
You: sounds like you don’t like variable annuities all that much.
Me: yeah, I don’t. I think that although they offer full upside market participation the downside risks and fees are too great.
Tyson: well I think you hit the nail on the head with this one, you were a little harsh but I agree you on the overall value of variable annuities.
This is an independent product review, not a recommendation to buy or sell an annuity. This review is not endorsed by any insurance company and I do not receive any compensation for this review. This review is meant to be an independent analysis to provide the reader with information and concepts to help them make informed decisions. Before purchasing any investment product be sure to do your own due diligence and consult a properly licensed professional should you have specific questions as they relate to your individual circumstances. All names, marks, and materials used for this review are property of their respective owners.