Of the “guaranteed minimum” benefits, which is most commonly offered on deferred variable annuities?
A. Guaranteed minimum income benefits B. Guaranteed minimum accumulation benefits C. Guaranteed minimum withdrawal benefits D. Guaranteed lifetime withdrawal benefits ANSWER: C, according to NAVA. About two-thirds of contracts offer some form of this. In general, this benefit promises that a certain percentage — usually 5% to 7% — of the amount invested can be withdrawn annually until the entire amount is completely recovered, regardless of market performance. If the underlying investments perform well, there will be an excess amount in the policy at the end of the withdrawal period. The cost typically ranges from 0.35% to 0.75% of the amount invested. Mark Cortazzo, an investment adviser in Parsippany, N.J., likens the extra cost to paying for car or homeowners insurance. “You’d be crazy if you didn’t have homeowners insurance,” he says. “You are paying for something I hope you never need.” But you have to be careful, he says: The contracts are incredibly complicated, and “the vast
