Debunking the myth that variable annuities require investors to give up control of their money.

This is the fourth in a series of articles to help you overcome common objections to variable annuities (VAs). Each month we’ll tackle a common myth about VAs and offer facts and information to counter those misconceptions.
A couple makes a decision with their advisor about their financial plan and are happy at the flexibility and control they have over their investments.

Variable annuities provide investors access to their assets.

Some people think if they put their money into an annuity, they lose access to it.
At one time, that may have been a legitimate fear, but like many financial products, annuities have evolved to be more customer friendly.
Here are four ways clients can help control their money in a VA.

Investing for future guaranteed income.

1. Shorter surrender charge periods

Variable annuities (VAs) do come with surrender charges. But consumer demand has resulted in providers shortening surrender charge periods in recent years, with most now averaging six to eight years.
Under certain conditions, the surrender charge can be waived. Since VAs are considered long-term investments, surrender charge periods may be less of a deterrent now.

2. Free withdrawals each year

Most VAs offer a free withdrawal amount each year even when the surrender charge period is in effect. Clients have full access to their funds once the surrender charge period ends. (There are also qualifying events, like a terminal illness or becoming disabled, which may allow withdrawals with no surrender charges.)

3. Control over how money’s invested

Investment-oriented VAs, like our Principal® Pivot Series, help clients invest with control and flexibility. It’s not a “set it and forget it” product. Clients can be as involved in their investment choices as they want to be.
With more than 90 investment options, Principal® Pivot Series clients can move money in or out at any time. If they move money to another subaccount within the annuity, there are no additional taxes or fees.
VAs with guaranteed income options may have fewer investments to choose from, but they do offer clients guaranteed income in retirement—no matter how long they live.* Your clients also control how they receive that income. They can choose income for single or joint (married) and can turn income on or off as needed.

4. Death benefits and legacy planning

Our Principal® Lifetime Income Solutions II VA allows clients to leave their beneficiaries the remaining balance in their annuity if all their guaranteed income hasn’t been paid out. Our Principal Pivot Series VA offers a variety of legacy planning options, allowing your clients to create beneficiary plans specific to what they want.
Both of our VAs offer death benefit features that don’t require underwriting and the inherited money passes outside of probate. We even offer a restricted beneficiary option (PDF), so the owner of the annuity can set conditions for the inheritance of their money. Even after passing away, the client is in charge.

Want to learn more?

Ready to get started?

You can create an investment plan for clients now, and for their future. Learn more about VAs at principal.com. To get started, contact your local Principal® representative or support team. Call us at 866-309-1623.

*Please inform clients that lifetime income is dependent upon the income option selected.

Annuity products and services are offered through Principal Life Insurance Company. Securities offered through Principal Securities, Inc., member SIPC, and/or independent broker/dealers. Referenced companies are members of the Principal Financial Group®, Des Moines, IA 50392.

Guarantees are based upon the claims-paying ability of the issuing insurance company.


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This information is educational only and provided with the understanding that Principal® is not rendering consulting, legal, accounting, investment or tax advice. You should consult with appropriate individuals including counsel, financial professional or other advisors on all matters pertaining to business, legal, tax, investment or accounting obligations and requirements.

Insurance products and plan administrative services provided through Principal Life Insurance Co., a member of the Principal Financial Group®, Des Moines, IA 50392.

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