Lower fees, better features

Annuity products have evolved dramatically in recent years. Fees have come down, features have improved, and options that didn't exist 5–10 years ago are now widely available. If your current annuity feels outdated, expensive, or limited, a modern alternative may solve problems your current contract cannot.

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Contract value

Current total annual fees (%)

Years until withdrawal: 10 yrs

120 yrs

Fee reduction opportunities

Many variable annuities issued in the 2000s and 2010s carry total annual fees of 2.5–3.5% or more — M&E charges, sub-account expenses, rider fees, and administrative charges, all stacked. Here is how that compares to a modern FIA.

Fee type	Typical old VA	Modern FIA
M&E charge	1.00–1.75%	None
Sub-account expenses	0.50–1.50%	None
Income rider fee	0.75–1.25%	0.75–1.15% (if elected)
Admin charges	0.10–0.30%	None
Total annual fees	2.5–3.5%+	0–1.25%

On a $200,000 contract, 3.0% in annual fees costs $6,000/year — $60,000 over 10 years. A modern FIA at 0–1.25% saves $3,500–$5,500/year.

Compare net rates, not stated fees

If your current FIA has a 3–4% spread (an invisible fee embedded in crediting), a new FIA with a 1.50% strategy charge but no spread may actually cost less in net terms — and offer higher participation rates.

A product with a visible 1% fee and a 10% cap may outperform a product with “no fees” and a 5% cap after a 3% spread.

Feature upgrades available today

Income riders

If your current annuity has no income rider and you now want guaranteed lifetime income, newer FIAs offer embedded GLWBs. Your current contract cannot add a rider after issue — but a new one can provide it from day one. If your current rider has a low payout factor, today's competitive riders may offer significantly higher income per dollar.

In-contract Roth conversion capability

Most older annuities do not support in-contract Roth conversions. Newer products from Athene, Allianz, North American, Midland National, and EquiTrust offer mirrored contract conversions that let you change your annuity's tax status from Traditional IRA to Roth without surrendering. If Roth conversion is part of your retirement tax strategy, this feature alone may justify a replacement.

Long-term care provisions

Many older annuities have no LTC provisions at all. Newer FIAs increasingly include nursing home waivers at no extra charge, and some include LTC benefit enhancements. Products like North American's Income Pay Pro include a nursing home multiplier that can double your income for up to 5 years if confined to a qualified care facility.

Enhanced death benefits

Older contracts may only offer a standard death benefit (account value or premiums minus withdrawals). Newer products like the Athene BCA 2.0 include a Balanced Allocation Value (BAV) that provides a daily-calculated enhanced death benefit without a separate rider fee.

Better index options and crediting methods

The universe of index options has expanded dramatically. Newer FIAs offer S&P 500, proprietary volatility-controlled indices with participation rates of 200–400%+, performance triggers, and multi-year crediting strategies that were simply not available 5–10 years ago.

Shorter surrender periods

Older FIAs often have 10–14 year surrender periods. Many newer FIAs offer 5–7 year terms with competitive features, giving you more flexibility and earlier access to your full account value.

The decision framework

Ask yourself these four questions before you move.

Am I paying more in annual fees than I need to?

If your total fees exceed 2%, there are almost certainly lower-cost alternatives.

Does my current contract lack features I now want?

If you want income riders, Roth conversion capability, LTC provisions, or better index options that your contract can't provide, a replacement may be warranted.

Can the new product genuinely improve my outcome — net of all switching costs?

Run the math on surrender charges, new surrender periods, and feature differences.

Am I being pushed by a salesperson, or am I making an informed decision?

Under the NAIC Best Interest standard, any replacement recommendation must prioritize your interest. If you feel pressured, get a second opinion.

Frequently asked questions

What if my current annuity has 'no fees'?

Be sure to check for spreads (invisible deductions from index returns), lower crediting rates compared to current products, and whether the product lacks features you now need. 'No fees' doesn't always mean 'best value.'

Is it worth replacing a variable annuity just for lower fees?

Often, yes. A variable annuity charging 3% in fees would consume $60,000+ over 10 years on a $200,000 balance. An FIA with 1% in fees would consume $20,000 over the same period — and add principal protection. The $40,000 difference compounds into even greater savings.

Can I get modern features without replacing?

In most cases, no. Riders, crediting methods, and conversion capabilities are fixed at contract issue. The only way to access newer features is to move to a newer product.

What if my surrender period ends soon?

If you're within 1–2 years of the surrender period ending, it often makes sense to wait. Once the surrender period expires, you can exchange with zero penalty. Use the waiting period to research alternatives so you're ready to act when the time comes.

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Replacing an existing annuity involves potential surrender charges, loss of existing benefits, new surrender periods, market value adjustments, and tax implications. This content is for educational purposes only. All guarantees are backed by the claims-paying ability of the issuing insurance company.

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