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The L share annuity class is a variable annuity’s version that begins paying earlier than others, but has high administrative costs. This one is specifically curated for investors who wish to start withdrawing funds from an account after a short time period.
Apart from this, there are other share classes that are provided by variable annuities, such as A share, B share, C share, O share and X share.
In general, a variable annuity is a long-term investment that is set up by an insurance firm for an investor who is planning to retire. The investor pays a specific annual premium, which is again invested in any of the assets’ combination, such as Money market funds, Bonds, and stocks.
The accumulated wealth from such investments is usually tax-deferred until the money gets withdrawn, and the variable annuity value is correlated with the Underlying investments’ performance.
Along with the paid premium, the annuitant also has to pay a Mortality Risk and Expense (M&E) fee to recompense the insurance firm for the risk that the annuitant may outlive the life expectancy. Thus, the insurance company offers assured annuitized frequent payments to the annuity investor. These variable annuities get regulated by the state insurance regulators, the Financial Industry Regulatory Authority (FINRA) and the Securities Exchange Commission (SEC).
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