Variable Annuity Living Benefits: What Is It?

A variable annuity living benefits, or rather a variable annuity that has living benefits, is one of the reasons some of today’s top investors do recommend that people invest in annuities and include them in their long term retirement planning methods. This is a specific type of annuity and it goes without saying that since it is a variable annuity, there are high risks involved since these annuities do fluctuate in value based on the investment’s performance in the market place. With that in mind, consider what variable annuity living benefits actually are.

First, consider what a variable annuity is. This is a tax deferred retirement product that will pay the investor, who is also called the annuitant, over a set amount of time. Many of them also have death benefits which are funds paid to the beneficiaries listed on the annuity. The benefit that is paid to the investor is based on the purchase payments as well as how well the underlying investments (that help the annuity to grow) perform in the market place. The underlying investments in a variable annuity can actually be diversified and they can be rebalanced if they need to be. This gives the investor more flexibility and therefore the ability to monitor and even change his investments to protect them as he sees fit.

So, what is the variable annuity living benefit? The living benefit is usually an add on or optional selection that the investor can select for an additional fee when securing the annuity. Most investors do say that it does make sense to take on this living benefit, even with the cost, since it provides a stronger opportunity. In short, the living benefit gives a guarantee to the benefit that is provided to the annuitant. In other words, most living benefits offer some level of protection over the principal investment that was made to fund the annuity. This also offers protection over the annuity payments that are promised.

The benefit to having this type of variable annuity living benefit is that with its purchase, the investor is able to have a guaranteed income over the rest of their life once payments from the annuity begin to happen, or at least over the specified period associated with the annuity. This benefit may be carried over to the beneficiary at the time of death if there is a death benefit involved.

A variable annuity living benefit can be an outstanding way to protect your money and for that reason, it is often considered a must have for the average investor. There are costs associated with obtaining this type of investment tool, but those costs often are worthwhile when you consider the fact that the principal investment is protected from full loss. For the average investor who is just starting to consider the value of investing in annuities, consider the benefits of the variable annuity living benefit. If you go without this protection, the value of the annuity can decrease sharply over your lifetime.