To learn more about this NO-LOAD VA (including watching a recorded webinar), please click on the following link: http://www.pomplanning.net/no-load-va-signupsignup.
Loads/Fees in VAs—the following are the typical loads (fees) charged in a VA (not including guaranteed income rider or other rider fees):
Annual Money-Management Fees – this fee is charged by a security-licensed advisor to help clients manage the assets in the VA. An average money-management fee is approximately .9% per year.
Mutual-Fund Expenses – most VAs use mutual funds. Mutual-fund fees range from .3% with index funds to 2.5%+ with international or other exotic funds. The average mutual-fund fee is approximately 1.5%.
Mortality-and-Expense Risk Charge – this charge is typically 1.25% a year and is charged every year against the account value. This charge pays for commissions that are paid to agents as well as for mortality costs and to generate profits for the insurance company.
Administrative Fees –these are just what they sound like and can be $25 or $30 per year or as a percentage of the account value life of 0.15% per year.
Surrender Charges –a typical surrender-charge period would be between 5-16 years. The average is around 7 years, and the charge in year one is usually 7% and then decreases 1% a year until it’s zero in year 8.
If you add up all typical fees in a VA, they will typically be in excess of 3.65% a year.
New No-Load VA—POM Planning uses a new no-load VA that was recently released and it has two very unique qualities to it that the average VA doesn’t.
1) NO mortality-and-expense risk charge
2) NO surrender charges
How great is that for clients? Right out of the gate, if you use this NO-LOAD VA, you can save your clients 1.25% in M&E costs every year and put them in a VA they can leave at any time with NO penalty. The only charge is a $20 a per month contract charge.
Example: Assume a client has $250,000 to fund a VA. Assume the same rate of return in the VA (7.5% gross rate of return), and that the money grows for only 10 years. What’s the difference in account values at the end of the term?
Loaded VA – $364,758
No-Load VA – $411,119
Difference = $46,361
Choice—if your clients had the choice of a VA with M&E charges and surrender charges and one without, which one would they choose. To ask the question is to answer it.
It’s very exciting that this same money-management platform can be used INSIDE the No-Load VA.