Flexible Premium Variable Annuity III review

It depends on what you want it to do. As a tax-deferred investment wrapper from a top-rated carrier, it is a solid, conventional variable annuity with a deep fund menu and an unusually low entry point. As a way to protect your money, it is not — there is no living benefit and no principal guarantee, so a bad market hits your account value directly. If you already understand and accept market risk and you've run out of other tax-advantaged room, it can make sense. If you wanted guarantees, this is the wrong product type entirely.

The rational reason to buy this is tax deferral on investment dollars after you've already filled up your 401(k) and IRA. You can move between 88 subaccounts without triggering a taxable event, which is genuinely useful for someone who rebalances actively. The optional enhanced death benefit adds a reason for someone who wants their heirs protected from market timing — if you die in a down market, the death benefit can pay out more than the depressed account value. And the $50 minimum makes it accessible in a way most annuities are not.

I think this is best for a middle-aged or pre-retirement investor — say, 45 to 65 — who has maxed out qualified accounts, is comfortable with stock-market volatility, and intends to leave the money invested through the full nine-year surrender period. Non-qualified money is the natural home for it, since the main draw is tax deferral you can't get elsewhere. It is a poor fit for anyone who wants guaranteed income, anyone who can't tolerate seeing their balance drop in a downturn, anyone who might need the money within nine years, and anyone buying inside an IRA purely for the tax deferral they already have.

Strip away the "annuity" label and this is a brokerage-style investment account with an insurance layer on top. Your premium buys units in subaccounts — these are essentially mutual funds — and the value moves with the markets those funds hold. The insurance company is not promising you a return or protecting your principal during accumulation. What it is selling you is the tax-deferred wrapper, the ability to switch funds without tax consequences, and a death benefit. That is the real product: a tax shelter and an estate feature, not a guarantee.

The core of this contract is the subaccount menu — 88 variable investment options spanning stock, bond, and balanced strategies. You allocate your premium across the ones you choose, and your account value is simply the combined value of those holdings minus fees. There is no cap, no participation rate, and no index crediting formula, because this is not an indexed product — you get the full upside and the full downside of the funds you pick. The net fund-level expenses run from 0.28% to 1.34% depending on which subaccounts you hold, and those fund costs come on top of the contract's own insurance charges. The flip side of full market exposure is full market risk: in a bad year, your balance falls.

The most meaningful secondary feature is the optional enhanced death benefit, marketed as Annual Death Benefit Reset II. For roughly 0.25% a year (it can rise to a 1.00% maximum), it locks in your highest contract anniversary value as a floor for what your beneficiaries receive, even if the market later drops your account value below that high-water mark. That matters because the base contract already pays the greater of account value or premiums paid at death — the rider's job is to capture market gains along the way so a downturn near the end of your life doesn't erase them for your heirs. Whether the 0.25% is worth it depends entirely on whether estate protection is a real goal for you; for a pure accumulator it's just another drag on returns.

This is a nine-year commitment, and that's a long horizon for an accumulation annuity. Each year you can withdraw the greater of 10% of premiums paid (in year one), 10% of the prior anniversary value (in later years), your earnings, or 10% of current account value without a surrender charge. Anything above that free amount during the first nine years is hit with a declining surrender charge that starts at 7% and steps down to 1% in year nine before disappearing. A market value adjustment (MVA) also applies — that means the penalty on a large withdrawal can move with interest rates, sometimes adding to it. New York Life does provide surrender-charge waivers for nursing home confinement, terminal illness, disability, and unemployment, which softens the commitment in genuine emergencies. Subsequent premiums are allowed only until age 86. Even with the waivers, money you might need within nine years does not belong here.

The headline cost is the roughly 1.30% total annual expense, driven mainly by the mortality and expense (M&E) charge that the insurer assesses against your account value every year — up or down market, you pay it. On top of that sit the underlying fund expenses, which range from 0.28% to 1.34% depending on the subaccounts you hold, so a fund-heavy allocation can push your all-in cost well above the 1.30% contract figure. There's a $30 annual contract fee, but it's waived once your account value reaches $50,000, so most serious investors won't pay it. The optional enhanced death benefit adds about 0.25% if you elect it. The trade to name here is plain: you're paying an insurance-grade fee stack for tax deferral and a death benefit, and that stack will quietly outweigh the tax benefit for some buyers — especially anyone holding tax-efficient index funds elsewhere who doesn't need the wrapper.

Legal Entity: New York Life Insurance and Annuity Corporation

Parent: New York Life Insurance Company

A.M. Best Rating: A++

New York Life Insurance and Annuity Corporation is a subsidiary of New York Life Insurance Company, a large mutual insurer with an A++ rating from A.M. Best — the highest grade the agency assigns. For a variable annuity, where the carrier isn't guaranteeing your investment return, financial strength matters most for the death benefit and the contract guarantees that do exist. On that front this is about as strong a backer as you'll find.