What is the definition of B-Share Variable Annuity?
A B-Share Variable Annuity is a type of variable annuity that does not levy a sales charge at the start of the annuity contract. However, if the annuity owner decides to cancel the contract before it reaches its annuity date, he will have to pay the deferred sales charges. These charges depend on the period he surrendered the annuity. The rate is usually from 5% to 7% during the first year of the annuity. The surrender rate will slide down to 0 after about 5 to 7 years.
As for its variable component, this refers to the fact that the annuity payments are not guaranteed - they will depend on the performance of the investments. The insurance company will only guarantee a minimum return, the remaining income payments may change. This is contrasted with the fixed annuity, which guarantees the payments of the annuity, whether the investments perform well or not.
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