L Share Annuity Class
Candlefocus EditorL-Share annuities are a unique type of variable annuity that provides investors with attractive features, but also with significant downsides. This article will cover what an L-Share annuity is, the benefits, and possible drawbacks so you can make an informed decision.
An L-share annuity is a type of variable annuity that offers a shorter surrender period — typically three or four years. Because of this shorter surrender period, the investor has greater flexibility in how they access their funds without incurring any penalties. This makes them slightly different from other variable annuities, which usually have surrender periods of 10 years or longer.
However, L-Share annuities do have higher administrative charges than other annuities, making them more expensive than other annuity types. This is due to the fact that they require more administrative work and heavier capital outlays.
One of the key benefits of L-Share annuities is their tax-deferred approach, where you won't be required to pay taxes until you withdraw the funds. This means you can build up your savings more quickly, as your money will earn more interest over time.
L-Share annuities also offer some great investment options, such as stocks, bonds, and mutual funds. You can invest in a variety of asset classes depending on your risk tolerance and financial goals.
When it comes to drawbacks, one of the main ones is that the fees associated with L-Share annuities is quite high. Because of the shorter surrender period, there is typically a higher mortality and expense risk charge. Additionally, because of the fees associated with purchasing an L-Share annuity, you may not break even on your investment for some time.
Overall, L-Share annuities can be an attractive option for some investors. The short surrender period allows for greater access to your money, while the tax-deferral benefits can help to build up your savings. Yet the higher fees associated with this type of annuity can be prohibitive and may mean you don't make money in the short term. It's important to weigh all the pros and cons before investing in an L-Share annuity.