Independent Review Of The Prudential L Series Variable Annuity
What will be covered in this annuity review?
In this review, we will be going over the following information regarding the Prudential L Series Variable annuity:
- Product Type
- Fees Charged
- How It Is Used
- How It Is Most Poorly Used
It may become clear to you as you go through this annuity review that the Prudential L Series variable annuity – just as with many other annuities – will be able to perform very well in certain circumstances. However, there are also other situations where this particular annuity will not be the best alternative. This is especially true, depending on what your particular goals are for the annuity.
Annuity and Retirement Income Planning That You Can Trust
It is entirely possible that you have stumbled upon our website and as such, you are not really certain what we do, or why we are reviewing this annuity. The good news is, though, that if you have been searching for information on particular annuities, then you have found yourself to be in the right place.
In fact, if you have been doing any type of annuity research at all – especially via the Internet – then it is entirely possible that you have at some point run across certain websites that make claims about annuities for the sole purpose of obtaining your contact information.
Just as an example, these sites will often times state that the annuity products that they offer can provide the:
- Highest Payouts
- Lowest Fees
- Top Rated Companies
- 7-8% Returns – with NO Market Risk
The reality is, though, that you need to be careful when considering the purchase of an annuity from these types of websites – or from anyone else who might make these types of claims, especially if the annuity provider doesn’t even inquire as to why you are purchasing the annuity in the first place. This is because knowing your goals for the annuity is imperative.
In addition, many of the annuity products that are offered via these sites are not able to make good on their claims, such as 7-8% returns, in many instances. So, counting on these returns can often lead to disappointment.
Here at AnnuityGator.com, we provide annuity reviews that are thorough, independent, and objective, because we want you to decide for yourself whether the annuity that is being reviewed makes sense for your financial goals and needs.
In addition, we have been offering these types of annuity reviews for much longer than most of the “copycat” sites that you will find out there on the Internet.
So, let’s get started.
Prudential L Series Variable Annuity at a Glance
|Product Name||Prudential L Series Variable Annuity|
|Type of Product||Variable Annuity
|Standard & Poor's Rating||AA- (Very Strong)
|Phone Number||(855) 366-5312|
Opening Thoughts on the Prudential L Series Variable Annuity
Typically, variable annuities are designed to provide two primary benefits to their holders – the growth of principal in the account, and the production of retirement income. However, the reality is that variable annuities are not really all that good at producing retirement income.
One of the reasons for this is because of the risk that these types of annuities can present to their investors – as well as to the underlying insurance carriers that offer them. Also, because the value that is inside a variable annuity fluctuates so much, it is typical for an offering insurer to guarantee a lower amount of retirement income from a variable annuity – sometimes even less than from vehicles that are considered “safer” such as fixed annuities.
So, for every dollar that is invested into a variable annuity, it could very well offer you a lower amount of income than would a fixed annuity, for the very same amount of money deposited. Therefore, for this reason, if your primary reason for purchasing an annuity is future retirement income, then a variable annuity may not be the best option in this case.
If you are considering a variable annuity for growing principal, these financial vehicles can provide you with the opportunity for a high return. Typically, variable annuities will have a number of different investment options to choose from, as does the Prudential L Series variable annuity. These will allow you to pick from various asset classes, and often you can also “customize” your variable annuity portfolio. But, because you are still working within the parameters of an equity-related product, you will still be exposed to potential downside market risk.
Also, a variable annuity can eat away at returns due to the substantial amount of fees that these vehicles can be subject to. This is because variable annuities generally charge fees from several different places – including a front and/or back-end load, annual management fees, administrative charges, and additional fees if there are any optional riders attached. For this reason, as well as the fact that variable annuities are exposed to market-related risk, it can be somewhat challenging to obtain high returns with these types of annuities.
Before moving on to the details about the annuity, there are some legal details that need to be disclosed…
This is an independent annuity review, and because of that, there will be no recommendations provided here with regard to either purchasing or selling any type of annuity products. Prudential has not endorsed this annuity review in any way. The information presented in this
review is solely for the purpose of providing an opinion so that the reader can see our personal perspective and from that, determine whether this annuity may or may not fit in with their personal financial portfolio.
Prior to purchasing any financial product or service, it is wise to pursue your own due diligence. It is also a good idea to consult with a properly licensed and competent financial professional. This can help you with better determining whether or not the financial product or service could be a good fit for your specific goals and needs.
All of the names, trademarks, and materials that were used for this annuity review are the property of their respective owners.
How Prudential Describes the Series L Variable Annuity
The Series L variable annuity is an annuity in the group of Prudential’s Premier Retirement annuity series. With over 140 years in the insurance industry, Prudential has a long history of helping investors to grow and protect their money. The company is well known for delivering on its promises to its customers and policyholders and has been recognized as a trusted brand, as well as one of the most admired companies in the world.
As of early 2016, Prudential, or “Pru,” held in excess of $1.2 trillion in assets under management, and had approximately $3.5 trillion of gross life insurance in force worldwide. It is ranked as the second-largest life insurer in the United States based upon total admitted assets, and it was ranked first in the Life and Health category of Fortune magazine’s 2015 list of the World’s Most Admired Companies.
The Prudential Series L variable annuity is described by Prudential as being a flexible vehicle for those who are unsure about their retirement time horizon and goals. This annuity offers 61 different investment options that are professionally managed – which cover a wide range of asset classes and styles. This can allow investors a way to essentially customize and create a portfolio that will best meet their specific requirements. It is also described as being somewhat “flexible.”
There are other features included with this annuity that the investor may consider, such as a guaranteed death benefit, as well as living benefits. These can be accessed, for example, if the annuity holder is diagnosed with a terminal illness and requires the funds for health care expenses and/or long-term care needs.
As with other types of annuities, the Prudential Series L variable annuity also provides the ability to grow funds within the account on a tax-deferred basis, meaning that there are no taxes due on the growth of the funds until the time of withdrawal.
How a Financial Salespeople Might “Pitch” this Annuity
The Prudential L Series variable annuity is one of the several annuities in Pru’s “Premier Retirement” variable annuity series. This particular annuity is deemed to offer more flexibility to investors, and so with that in mind, it is likely that financial sales people will key in on this aspect.
What exactly does that mean? First, the “flexibility” aspect of this annuity refers to the fact that the back-end surrender charges stop after only four years. Therefore, if an investor’s needs happen to change and he or she needs the money for other things after that time, then they will be able to take the money out of the annuity without incurring a hefty surrender fee.
Another key selling feature of the L Series annuity is the 61 different investment options that can be chosen. Here, too, a financial salesperson would likely key in on the wide variety of different options that can be used to basically “customize” a portfolio that meets an investor’s needs.
Even with all of these different investment options, though, what a financial salesperson may not focus in on is the fact that the variable annuity will still be exposed to market risk. So, prior to moving forward with a variable annuity, it is important to consider just exactly how much tolerance for risk you have, and how much risk you are comfortable with taking for the long term.
What About Fees?
When considering annuities and fees, variable annuities are actually considered to be one of the more expensive products in the marketplace – and the Prudential L Series variable annuity is certainly no exception.
In this particular case, the annuity is marketed as being flexible. But, that flexibility will cost you. One example is that the withdrawal charges on the L Series annuity have been designed to offer some flexibility for those who feel that their situation may change over time.
Here, the surrender charges on this annuity start out at 7% for the first two years, then grade down to 6% in Year 3, and then go to 5% in Year 4. After that, there are no surrender charges.
There is also no up-front load. However, the tradeoff is that the insurance charges on the L Series are higher than those in the other variable annuities in Prudential’s Premier Retirement series.
So, it can really come down to whether the need for having liquidity over that first couple of years is worth the additional insurance charge. In this case, though – as with any type of annuity purchase – the investment should really be considered as a long-term endeavor, and the funds that are used should really not be required for emergencies. With that in mind, you will really want to consider your overall goals and purpose for purchasing the annuity.
There are also other fees to contend with in the L Series variable annuity, too. For instance, the annuity has annual portfolio operating expenses that range between 0.59% and 2.11% each year.
You must also not forget that the investment funds that are inside of the annuity will each have their own management fees, too. In this case, just to cite an example, Goldman Sachs Multi-Asset Portfolio has a net annual fund operating expense of 1.08%.
Our Take on the Prudential L Series Variable Annuity
Where it works best:
When considering the Prudential L Series variable annuity, it can generally work best when an investor wants to be invested in the market for growth opportunity, yet still wants to have the ability to have retirement income in the future. This is because the annuity allows the ability for investment in roughly 61 different investment options, from a variety of different asset classes.
In addition, you also have the ability to obtain tax-deferred growth. Therefore, if you have already maxed out other tax-advantaged investment options such as an employer-sponsored retirement plan and/or an IRA account, then this type of annuity may be able to provide another alternative for tax-deferred growth.
Also, variable annuities – just as any other type of annuity – can be good options for people who are concerned about outliving their income or savings in their retirement years. This is because annuities can offer a guaranteed stream of income for life.
Where it works worst:
If an individual does not plan on using the income benefit on a variable annuity, then it may not be the best product, and other more suitable financial vehicles should be considered. This is because, due to the high fees that can be incurred – both inside of the annuity itself, as well as through the mutual funds – this can be quite an expensive way to go.
Whenever considering any type of a financial product, it is essential to first determine your goals. For example, in certain situations, a particular financial product may at first glance appear to offer both growth and income potential. However, after a more thorough review, the opportunity actually comes at a high price.
In the case of the Prudential L Series variable annuity, there are some nice features about it – including the flexibility, and the fact that the surrender charges on this annuity only go out for four years and then they disappear.
In addition, this annuity does provide the opportunity to receive lifetime income. However, the income that you can actually receive will need to be weighed out by the potential risk to the principal that is inside of the annuity during its accumulation period, based on market ups and downs, because this can affect the income that is ultimately received.
Given that, the only way to really know if this annuity will be right for you is to have it tested. We can offer you this testing for free. So, contact us and we can provide you with a better illustration of what this annuity may be able to return for you.
Do You Have Any Additional Questions on the Prudential L Series Annuity? See Any Mistakes on this Review?
Do you have any additional questions or concerns regarding the Prudential L Series variable annuity? If so, we’d be happy to answer them. Or, if you noticed that there was any information in this review that may need to be updated or corrected, then please contact us and let us know.
Throughout the past few years, annuities have become much more popular with investors – and especially those who are approaching retirement. This has been due in large part to the fact that annuities can offer a guaranteed retirement income stream. Because of this, many financial advisors have been pushing annuities on their clients – even if the annuity may or may not make sense.
But annuities can be confusing. And, you really need to know what it is that you are purchasing with your retirement savings. These are long-term financial vehicles, so you really don’t want to make a costly mistake with your funds, because it can be difficult to get out, and it could cost you a great deal in surrender charges if you decide to do so.
With that in mind, if an annuity that you are considering does not make sense to you, it is extremely important that you ask questions now. If, however, an annuity does make sense for you and your financial circumstances, then it could be an ideal addition to your overall financial picture.
If there are other investors that you know who might also possibly benefit from an annuity, then you could share this review with them. Today, there are many investors who are receiving conflicting information about annuities. We have a goal of providing information about these financial vehicles in an objective manner so that people are able to better understand them and in turn, so that they can decide whether annuities truly make sense for them.
So, if you are able to help in spreading the word, it can be truly beneficial. For example, if you have a Facebook account, then you could just simply click on the “Facebook” icon here so that you can share this article and so that more people are able to find it, and can hopefully benefit from it.
Also, if you do happen to see that any of the information in this review is outdated or is in need of revision, then please let us know. Just like any other financial product, annuities do tend to change frequently – and because of that, it can be somewhat difficult to keep up with all of the updated. We are always happy to make any revisions that are needed in order to ensure that the information here is as clear and understandable as possible.