Vanguard Variable Annuity offered by Vanguard

Introduction
Type of Product Variable Annuity
Product NameVanguard Variable Annuity
Offered byVanguard
Company Info

Founded by the investment i... read more

Contract and Purchasing
Minimum Premium Payment5000
Maximum Premium Payment5000000
Minimum Additional Premium Payment250
Investments
Total Number of Investment Options15 [Find annuities with more investment options]
Fixed Account
Features and Benefits
Free WithdrawalsYes
Free Withdrawal Limit100
Guaranteed Death BenefitAvailable
Are Telephone Transactions AllowedYes
Fees and Expenses
Minimum Total Fees and Expenses0.48 [Find annuities with lower fees and expenses]
Maximum Total Fees and Expenses0.93 [Find annuities with lower fees and expenses]
Minimum Mortality and Expense Risk Charge "M&E Fee"0.2 [Find annuities with lower mortality and expense fees]
Maximum Mortality and Expense Risk Charge "M&E Fee"0.32 [Find annuities with lower mortality and expense fees]
Administrative Fee25.00 [Find annuities with lower administrative fees]
Contract Maintenance Fee0.1 [Find annuities with lower contract maintenance fees]
Early Withdrawal Charges / Surrender Fees
Minimum Investment Management Fee0.18 [Find annuities with lower investment management fees]
Maximum Investment Management Fee0.51 [Find annuities with lower investment management fees]
Sales Compensation
Contact Information
Company OfferingVanguard
Company TypeAsset Management
Phone Number877-662-7447
Websitewww.vanguard.com
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Contact Information Connect with a Financial Advisor
Reviews and Ratings
Average Review

4.6/5 from 5 Reviews


Key Phrases:
Annuity Product Types: 

Product Ratings and Reviews

Rating:
4
Average: 4 (1 vote)

I agree with almost everything said in the other reviews.

This Vanguard variable annuity is inexpensive, simple and has a living benefit feature that is straightforward and cost effective.

The one issue I have is that a different insurance company provides the guaranteed lifetime withdrawal benefit.  The company is Monumental Life.

I think this creates some confusion for potential customers.

Why would Vanguard need to bring in another insurance company to provide part of the product?

Doesn't Vanguard have its own insurance company, or couldn't it create one?

Vanguard has such a strong reputation for low cost and high quality. Seems like they could make this work in the insurance world as well.

Overall, I guess it just boils-down to simplicity versus confusion.  Having multiple companies provide various parts of the same product does not help to simplify an already confusing financial product. 

978 reads
Rating:
4
Average: 4 (1 vote)

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.

956 reads
Rating:
5
Average: 5 (1 vote)

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. 

1,017 reads
Rating:
5
Average: 5 (1 vote)

Most annuities come with something referred to as a surrender charge.

Surrender charges often last for 5 - 8 years.  They may start as high as 8 or 9 percent during the first year, and then scale down to 0 after a few years.

What this means is that the owner of the annuity is charged if they "surrender" (basically cancel or exchange the product) during the surrender charge period.

So, if a product has a 6 percent surrender charge during the second year and you choose to cancel during the second year, you will be charged 6 percent of the amount of your premium.

If you "invested" $100,000 in the annuity, you would be charged $6,000 for cancelling during the second year.

Surrender charges are a big issue and sticking point for annuities.

The fact that Vanguard has figured out a way to remove this unattractive feature from their variable annuity makes it one of the best products in the market.

1,355 reads

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