A few insurance companies are fighting annuities’ bad reputation for high fees and complexity with stripped-down offerings, The Wall Street Journal reports. But to some degree, columnist Tom Lauricella says, that’s merely a sales pitch.

He admits that the three main benefits of annuities is that they allow investors’ money to grow tax-free, offer lifetime income payouts and increasingly offer riders that protect investments against losses.

These are all great things, Lauricella says. “The problem is you have to pay up for these extras,” he maintains, not to mention the average 1.35% additional sales load many annuities charge to pay the insurance agents and brokers who sell them. All told, annuities charge fees of as much as 3%.

But now some companies are offering stripped-down VA versions, including one from Jefferson National, which charges a mere $20 a month insurance fee and offers low-cost index funds as sub-accounts.

Just don’t forget to buy this annuity straight from the insurance carrier, to avoid the 1% to 1.5% annual fee of a fee-based adviser, Lauricella advises.

The staff of Money Management Executive ("MME") has prepared these capsule summaries based on reports published by the news sources to which they are attributed. Those news sources are not associated with MME, and have not prepared, sponsored, endorsed, or approved these summaries.

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