Should You Exchange Your Variable Annuity?
September 18, 2019 by FINRA Staff
Perhaps you spoke with an investment professional about an existing variable annuity (VA) you own, and the possibility of exchanging your current VA with a new one came up. Before you rush into an exchange, be aware that replacing one VA with another involves a comparison of the complex features of each security.
As with so many decisions in life, there can be good reasons to consider an exchange—and there can be situations where an exchange is generally not a good idea. We’ll help you sort through both scenarios. In any case, you should exchange your annuity only when it is better for you, and not just better for the person trying to sell you a new annuity.
Some Background
An annuity is a contract between you and an insurance company, where the company promises to make periodic payments to you, starting immediately or at some future time. You buy the annuity either with a single payment or a series of payments.
In the case of a variable annuity, the amount that will accumulate and be paid varies with the stock, bond and money market funds that you chose as investment options. Variable annuities may impose a variety of fees when you invest in them. Fees generally include:
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