Phil Cannella – Phillip Cannella Media: Phil Cannella has done some exhaustive research on the various types of annuities available on the market and looked at their pros and cons. While many insurance companies offer various kinds with varying benefits and features, there are just a few major types of annuity. Of these, Phil Cannella urges the consumer to stay away from the variable annuity.
As Phil Cannella puts it, there’s one type of annuity in particular that gives the others a bad name, and that’s the infamous variable annuity. Its management fees are higher. It imposes more expenses on owners. And it’s riskier. In fact, a variable annuity is classified as a security because at its heart it is a collection of mutual fund subaccounts. An insurance company then wraps itself around these mutual fund subaccounts and offers insurance annuity features.
Phil Cannella goes on to explain that that all mutual funds have fees because they have fund management costs and expense ratios that must be satisfied. So, if you’re invested in these subaccounts through a variable annuity, you’ll have to pay the ongoing fees. Every year, you can expect to pay anywhere from 1¼% to as high as 2½%, and this is just the beginning!
In Phil Cannella’s crash proof retirement system, no variable annuities are ever utilized.