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185 Don’t Make Me Say I Told You So

would be allowed to withdraw $50,000 per year (10% of the initial
investment) without paying the surrender charge. Many variable
annuities also allow you to take penalty-free withdrawals to pay

for nursing home expenses.

It’s important to remember that withdrawals reduce the value
of your account, and may be subject to ordinary income tax. In

addition, if taken before age 59½, taxable withdrawals are subject
to a 10% federal income tax penalty, just like a withdrawal from an

IRA or 401(k).

Summary

► Look at the benefits you would like to receive from a variable
annuity contract.

► Add up all of those costs and fees to determine the total

annual cost of your contract.

► Determine the costs and fees associated with your current
investments.

► Compare the additional cost of adding the benefits and
guarantees provided by a variable annuity to your current

investments to decide if the protection they provide is worth
the extra cost.

► When possible, consider using index funds as the subaccount

investment in a variable annuity to cut down on costs.

Chapter 4: Annuities

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