Charles Schwab has introduced two new variable annuities that are among the lowest cost in the industry. The Schwab Genesis Variable Annuity™ is offered directly to Schwab clients and the Schwab Genesis Advisory Variable Annuity™ is available through independent Registered Investment Advisors (RIAs) who custody assets with Schwab Advisor Services. Both products are offered in collaboration with Protective Life Insurance Company and have base annuity fees 40% to 75% below the industry average.*
"We know costs matter, and flexibility, choice, and guaranteed income are highly valued by clients planning for retirement. That’s why we designed Genesis to be among the lowest cost variable annuities in the industry, offering a personalized, tax-deferred growth strategy with a variety of guaranteed lifetime income and death benefit protection options," said Tina Perrino, Vice President, Schwab Income Solutions.
The new products offer a broad line-up of 63 professionally managed investment portfolios from 12 different fund families, including the Schwab S&P 500 Index Portfolio, which has a total annual operating expense of 0.03%.
In addition, Genesis annuities have no surrender charges and offer optional income and death benefit protection for an additional cost. SecurePaySM Life, a guaranteed lifetime withdrawal benefit (GLWB) rider, is designed to lock-in gains annually and provide guaranteed income for life. An optional death benefit can provide purchase payment protection for loved ones regardless of how the market performs.
More information about the Schwab Genesis Variable Annuity is available here. RIAs can find more information about the Schwab Genesis Advisory Variable Annuity here.
Disclosures
* Base variable annuity fees (mortality, expense and administration charges) of 0.45% (or 0.65% when the Return of Purchase Payments Death Benefit is selected) for the Schwab Genesis Variable Annuity™ and 0.25% (or 0.45% when the Return of Purchase Payments Death Benefit is selected) for the Schwab Genesis Advisory Variable Annuity™, as compared with the industry average of 1.15%, according to a September 2, 2020 Morningstar® survey of 2,990 variable annuities. This fee does not include the election of the guaranteed lifetime withdrawal benefit or expenses associated with the underlying investment options.
Variable annuities are sold by prospectus only. You can request a prospectus by calling 866-663-5241 (option 2) or you may find the Schwab Genesis Variable Annuity online at Schwab.com/annuities. Before purchasing a variable annuity, you should carefully read the prospectus and consider the annuity's investment objectives and all risks, charges, and expenses associated with the annuity and its underlying fund investment options.
Brokerage and insurance products: Are not deposits • Are not FDIC-insured • Are not insured by any federal government agency • Are not guaranteed by the bank or any affiliate of the bank • May lose value
All guarantees depend on the claims-paying ability and financial strength of the issuing insurance company, not Schwab.
The SecurePaySM Life guaranteed lifetime withdrawal benefit (GLWB) rider is an optional benefit available for an additional cost of 1.10%. Investment restrictions and other limitations and parameters apply. The GLWB is not a cash value, surrender value, or death benefit, and is not available as a lump sum withdrawal. The GLWB is not a minimum return for any investment option nor a guarantee of any contract value. All withdrawals reduce the contract value and death benefit. The GLWB fee is an annualized percentage of the Benefit Base deducted monthly, may increase at any time up to a maximum of 2.00% (2.20%, if added after issue under the RightTime benefit), and is paid for through the sale of units of the investment options, which reduces the annuity account value.
Annuities are long-term products designed for retirement. Withdrawals of taxable amounts are subject to ordinary income tax and, if taken prior to age 59½, an additional 10% federal tax may apply. An investment in a variable annuity involves investment risk, including possible loss of principal. The contract, when redeemed, may be worth more or less than the total amount invested. Retirement plans and accounts such as an IRA, 401(k), etc., are tax-deferred (and subject to required minimum distributions) regardless of whether or not they are funded with an annuity.
This article originally appeared on Yahoo! Finance.
