Independent Review of the Jackson National Perspective II Variable Annuity with LifeGuard Freedom Flex
Today, I’m going to give as unbiased a review as I can of the Jackson National Perspective II Variable Annuity with LifeGuard Freedom Flex. A financial product like an annuity may not be useful for everyone, but there are those out there that could benefit from an annuity.
As a financial planner, people that I know usually approach me for financial advice. Recently, I’ve gotten more and more questions about annuities, so I thought I’d do an annuity review for the blog. As an independent fee-only financial planner, I don’t sell annuities, but I try to keep an open mind when I review financial products.
I have also filmed a video review for the Jackson National Perspective II Annuity that goes in depth about its features and how it handles some stress tests I put it through.
This review has been updated as of July 2013.
First, before we continue, I need to post a legal disclosure:
This article is considered a review. This article is neither a recommendation to buy nor a recommendation to sell an annuity. I am not compensated for this review. I am doing this review on my own volition. Jackson National has not endorsed this review in any way. Before purchasing any investment product you should perform your own due diligence by reviewing the prospectus and other materials for the product. This review should not be considered personalized advice. Please, consult a properly licensed professional should have specific question about how this product can fit into your individual financial circumstances. All names, trademarks, and materials used for this review are property of their respective owners.
Now that’s done, let’s get started.
Quick Background of Variable Annuities
A standard variable annuity (VA) allows investors to invest in subaccounts, which are like mutual funds, within the VA. Investors take on the risks of the market and usually have some sort of death benefit associated with the annuity for their heirs.
Over the past decade, new riders have come out for variable annuities that offer income guarantees. Typically, these products are sold as allowing investors to participate in the market, and get any upside from market growth, while avoiding a loss of income from a situation such as the Great Recession.
The story that salespeople tell about these lifetime income riders is that they offer an investor a minimum income for life even if the investments take a dive.
The Financial Crisis of ‘08-‘09 has caused many investors to fear another recession and a lot of salespeople are exploiting that fear. My worry is that investors aren’t getting all of the facts that they need to properly evaluate these complex financial products. Even worse, many salespeople may not even know how these products work themselves because they haven’t taken an in-depth look and broken one down piece by piece.
What are the Fees for this Annuity?
So now we’ll go over fees, and after that I’ll show you the break down and stress test of the annuity.
Typically variable annuities pay a 6-7% commission to the agent/broker. That’s why the insurance company charges you a surrender charge or what this brochure calls a contingent deferred sales charge. if you don’t stay in the annuity long enough for the company to make a profit, you pay a surrender charge.
A surrender charge is a way for the insurance company to recover the costs of the commission they pay and it decreases over time.
Here is the surrender charge schedule for the Jackson National Perspective II Variable Annuity....
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