What is the definition of L-Share Variable Annuity?
An L-Share Variable Annuity is a type of variable annuity that is characterized by high mortality and expense risk charges and short and declining surrender periods.
L-Share Variable Annuities are aimed towards meeting the long-term investment needs of savers. It is best for investments where the client would need money in the long term - such as the case for a retirement savings fund. Withdrawals are made subject to ordinary income tax and a tax penalty.
The variable component of the annuity refers to the fact that the return rate is also tied to the performance of the market. The annuity issuer will just guarantee a low interest rate, and the rate of return above this guaranteed rate depends on whether the investments perform well or not.
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