Understanding the cost of an annuity

Are your clients confused about annuities, and how much they cost? Is it a struggle to explain the fees in a way the average person can understand?

Here at Jackson, we're here to help you help your clients make informed decisions. Annuities can offer a steady income stream during retirement, but navigating their costs can be complex. This quick read will break down the key components of annuity costs and explore—at a high level—whether annuities could be the right fit for your clients' financial plans.

Our goal is to empower you with the knowledge needed to match our annuity offerings with your clients' financial objectives.
 

Components of annuity costs

When considering how much annuities cost, it's essential to understand the various elements that influence the investment.
 

Fees

These include administrative fees for managing your account and withdrawal charges that apply if you withdraw funds early. Understanding these fees is essential for grasping the long-term costs associated with an annuity.
 

Commissions

Typically calculated as a percentage of the annuity's contract value, these commissions can impact your client's investment. We are committed to transparent commission practices so financial professionals and clients can clearly understand associated charges.
 

Annuity rates and interest rates

The rate you get can influence an investment's performance, and annuities are no different. For example, fixed annuity rates may increase in response to rising interest rates, while variable annuities offer potential for growth based on market performance.

We have a variety of annuity offerings designed to accommodate your client's risk tolerance, adapt to evolving market conditions and provide competitive annuity rates that can enhance investment outcomes.

Are annuities a good fit?

When asking, "Are annuities a good fit?" consider the sense of security they can offer in retirement planning. While they involve costs, the assurance of a guaranteed income stream in retirement can be invaluable for those seeking financial stability.

Annuities also come with tax advantages, as investments grow tax-deferred^† until withdrawal. This allows money to compound over time, potentially surpassing taxable options.

Moreover, some annuities can provide protection against market volatility. In unpredictable markets, the stability offered by certain annuities can become crucial, safeguarding against losses.

Assessing the value of an annuity goes beyond upfront costs; it's important to consider long-term benefits, client needs and security. 
 

Getting started with annuities

Helping your clients start their annuity journey can be easy with our exceptional service team. We're standing by, ready to assist you in the annuity sales process, efficiently and effectively from beginning to end.

Begin by assessing your clients' financial goals, considering risk tolerance, retirement plans and income requirements. We provide a diverse range of products tailored to various objectives.

Understanding how payouts may vary can be helpful in evaluating annuity options. We provide tools and resources that allow financial professionals to generate illustrative estimates based on inputs such as premium amount, payout period and annuity type. These calculators are intended to support informed discussions and help align expections. 

Partnering with us means access to an insight-driven approach, combining cost efficiency with optimized outcomes and a relationship based on trust. ​

We're here to help build confidence with you in every step of the annuity process, from initial discussions to finalizing agreements.

^*Guarantees are backed by the claims-paying ability of Jackson National Life Insurance Company or Jackson National Life Insurance Company of New York.

^†Tax deferral offers no additional value if an IRA or a qualified plan, such as a 401(k), is used to fund an annuity and may be found at lower cost in other investment products. It also may not be available if the annuity is owned by a legal entity such as a corporation or certain types of trusts.

Annuities are long-term, tax-deferred vehicles designed for retirement and are insurance contracts. Variable annuities and registered index-linked annuities involve investment risks and may lose value. Earnings are taxable as ordinary income when distributed. Individuals may be subject to a 10% additional tax for withdrawals before age 59½ unless an exception to the tax is met. Add-on living benefits are available for an extra charge in addition to the ongoing fees and expenses of the variable annuity and may be subject to conditions and limitations. There is no guarantee that an annuity with an add-on living benefit will provide sufficient supplemental retirement income.

Before investing, investors should carefully consider the investment objectives, risks, charges, and expenses of the variable annuity and its underlying investment options. The current contract prospectus and underlying fund prospectuses provide this and other important information. Please contact your financial professional or the Company to obtain the prospectuses. Please read the prospectuses carefully before investing or sending money.

Jackson, its distributors, and their respective representatives do not provide tax, accounting, or legal advice. Any tax statements contained herein were not intended or written to be used and cannot be used for the purpose of avoiding U.S. federal, state, or local tax penalties. Tax laws are complicated and subject to change. Tax results may depend on each taxpayer’s individual set of facts and circumstances. Clients should rely on their own independent advisors as to any tax, accounting, or legal statements made herein.

Guarantees are backed by the claims-paying ability of Jackson National Life Insurance Company or Jackson National Life Insurance Company of New York. For variable annuities, guarantees do not apply to the principal amount or investment performance of a variable annuity’s separate account or its underlying investments. They are not backed by the broker/dealer from which this annuity contract is purchased, by the insurance agency from which this annuity contract is purchased or any affiliates of those entities, and none makes any representations or guarantees regarding the claims-paying ability of Jackson National Life Insurance Company or Jackson National Life Insurance Company of New York.

Annuities are issued by Jackson National Life Insurance Company (Home Office: Lansing, Michigan) and in New York by Jackson National Life Insurance Company of New York (Home Office: Purchase, New York). Variable annuities and registered index-linked annuities are distributed by Jackson National Life Distributors LLC, member FINRA. These products have limitations and restrictions. Discuss them with your clients or contact Jackson for more information.

Jackson^® is the marketing name for Jackson Financial Inc., Jackson National Life Insurance Company^®, and Jackson National Life Insurance Company of New York^®.