Vanguard Variable Annuity offered by Vanguard

The Vanguard variable annuity comes with an optional guaranteed lifetime withdrawal benefit.

Living benefits have been very popular and most people who buy variable annuities choose to include a living benefit.

The problem is that these optional features can be very expensive--often in the range of 1.5 percent.

Also, living benefit features have become less attractive since the financial crisis.  Many insurance companies got burned because the living benefits they offered to be competitive were too rich and not priced appropriately.

Lower rates and higher costs are the result.

Vanguard's GLWB costs less than 1 percent (I think it is around .95 percent).

This is great and a huge plus for financial services consumers.

Very few people know what an annuity is.

Even fewer people know how annuities work.

Variable annuities are some of the most complex annuities because the optional living benefits create so many moving parts that are tough to understand.

Kudos to Vanguard for creating a simple, straightforward variable annuity.

There is a choice of 3 basic portfolios.  One is balanced, one moderate and one conservative.

There is also an optional living benefit that is a guaranteed lifetime withdrawal benefit (GLWB).

Living benefits can be very complex.  Vanguard's is pretty simple.  It ranges from 4.5 percent to 6.5 percent based on your age if you are single.  If you are married, it ranges from 4 to 6 percent based on age.

That's really about it.  Simple, effective and inexpensive.