If you own an annuity that is over 7 years old, you definitely need to investigate the benefits of “REFINANCING your old Annuity”!!!
What is refinancing?
Just like your home mortgage when rates change it makes great sense to refinance to lower your payment and even pull out equity. In the annuity world a similar opportunity is also true.
Old variable annuities often have very high fees- many times 3.5% to 5% per year. And when you purchased this annuity, you did so because of several factors; economy and current market conditions, rates and options available “at that time”. You may even have added certain “living Benefit Riders” that came with a fee- usually around 1% that gave you a guarantee of your principal or an income stream for a period or even life.
Many times, these benefits never get used- industry research show that upwards of 75% of VA’s with living benefit riders NEVER get utilized- therefore they are being paid for but not used. Why continue to pay for something you will never use.
Most of these companies also DO NOT let you drop these riders even if you will never use them- You are stuck for life paying for something you will never use.
Additionally, the market may have driven the account value way above the “benefit base- the amount used to calculate the guarantee. When this happens, you are able to move the annuity to a new one and “step up” the contract to a new guaranteed amount. this could affect a new living benefit rider or death benefit rider.
Now when it pertains to Fixed Index Annuities there is a similar but different “refinance” opportunity, and it does relate to rate.
If you purchased a Fixed Index Annuity 7 years ago or longer you might have been given a Cap rate of possibly 3-4% and the renewal rates were very small over the past few years. The recent massive Fed Fund rate increases have sent Fixed Index Annuity Cap rates on new issue contracts skyrocketing to as high as 9-11%. Which means it is a great time to refinance to a higher Cap rate.
If you have an old Variable Annuity or Fixed Index Annuity- let me help you maximize your retirement and refinance your old annuity today.