A 1035 exchange to an FIA: A smart choice in today’s environment
June 6, 2025 by Derek Miser
For those who purchased variable annuities between 2001 and 2015, today’s financial landscape presents a unique opportunity to revisit the terms of these contracts. The financial environment has changed significantly over the past 25 years, with interest rates now at their highest levels since the early 2000s. As a result, many retirees are finding that the growth-oriented, high-fee variable annuities they purchased years ago are no longer aligned with their income-focused needs in retirement.
Wink’s Moore on the Market: Current source of frustration…
Did you know that upwards of 70% of variable annuity (VA) contracts elect a living/death benefit rider?
That means that nearly three-quarters of VAs have a shadow fund value (a.k.a. “benefit base value”) that is greater than their account value.
*And here we are, suggesting 1035s from these VAs, into indexed annuities?*
As for the statement that indexed annuities “offer income riders with potentially lower costs and better features than the lifetime income benefits of older variable annuities”- um no.
The income riders on indexed annuities are every bit as high as those on variable annuities.
As for “better features” on “older variable annuities,” those older VAs have even GREATER shadow fund values. Isn’t that a “better feature?”
In regards to “today’s FIAs often come with lifetime income benefit riders at costs lower than those offered on older VAs-” no.
Older VAs had lower rider expenses than they do today. And the charges on these older riders are CERTAINLY less than indexed annuity rider charges today.
Come on. Do better. Insurance agents should know these things, particularly if they are steadily replacing legacy variable annuities. -sjm
