Variable annuities (VAs) appeal to investors because taxes are deferred until withdrawal. High costs can be a problem, though.
According to Morningstar, the VAs with the lowest insurance fees are offered by Fidelity (0.25 percent a year) and Vanguard (0.30 percent). Those are before expenses for the underlying investment accounts. If you include average fund expenses, Vanguard’s VA generally will be less expensive than Fidelity’s. TIAA-CREF also offers a low-cost VA.
A newcomer to this list is Jefferson National Life’s Monument Advisor VA, which became widely available in 2006. Offered through fee-based financial advisors, the insurance fee is a flat $240 a year. If you invest $50,000 in this VA, for example, the $240 annual fee would be 0.48 percent.
The Jefferson National VA includes a wide variety of investment accounts, including many with high expense ratios. However, there are some low-cost choices that enable investors to hold down their overall fees.
