What is a variable annuity?
A variable annuity is a contract with an insurance company. It's a long-term investment designed
for retirement purposes. Your client places money in professionally managed investment portfolios,
where it accumulates tax-deferred. When they retire, their savings can be used to generate a stream
of regular income payments that are guaranteed for as long as they live. In addition, variable annuities
may provide a guaranteed death benefit for your beneficiaries. Any such death benefit, however, may
be impacted by withdrawals or other actions they take in connection with the annuity. You can help
your clients determine if a variable annuity is suitable for them.
Why the company behind the annuity matters?
All references to income certainty and guarantees, including the benefit payment
obligations arising under the annuity contract guarantees, rider guarantees, benefits,
or annuity payout rates are backed by the claims-paying ability of the issuing insurance
company. Those payments and the responsibility to make them are not the obligations
of the third party broker/dealer from which this annuity is purchased or any of
its affiliates. They are also not obligations of any affiliates of the issuing insurance
company. All guarantees, including benefits, do not apply to the underlying investment
What are the limitations and restrictions I need to consider?
Annuity contracts contain exclusions, limitations, reductions of benefits, and terms
for keeping them in force. The optional benefits have certain investment, holding
period, liquidity, and withdrawal limitations and restrictions. Optional living
and death benefits may not be available in every state and may not be elected in
conjunction with certain optional benefits. Please see the prospectus.
Asset allocation does not ensure a profit or protect against a loss. Investment
returns and the principal value of an investment will fluctuate so that an investor's
units, when redeemed, may be worth more or less than the original investment.
What are the withdrawal consequences?
Since the annuity is designed to provide a guaranteed income stream for retirement, there are limitations and restrictions when making withdrawals that are not intended for retirement income purposes. Withdrawals in excess of the Annual Income Amount impact the value of your benefit and can also affect the certainty of their income. An excess withdrawal occurs when your cumulative Lifetime Withdrawals exceed the Annual Income Amount in any annuity year. If an excess withdrawal is taken, only the portion of the Lifetime Withdrawal that exceeds the remaining Annual Income Amount will proportionally and permanently reduce your Protected Withdrawal Value and your Annual Income Amount for future years. If an excess withdrawal reduces the account value to zero, no further amount would be payable and the contract terminates.
Withdrawals or surrenders may be subject to contingent deferred sales charges. Withdrawals and distributions of taxable amounts are subject to ordinary income tax and, if made prior to age 59½, may be subject to an additional 10% federal income tax penalty, sometimes referred to as an additional income tax. Withdrawals, other than from IRAs or employer retirement plans, are deemed to be gains out first for tax purposes. Withdrawals reduce the account value and the living and death benefits.
Understanding the costs associated with the Prudential Defined Income Variable Annuity
The annual fee for the Prudential Defined Income VA is 1.10%, plus an additional benefit fee of 0.80% for a total annual fee of 1.90%. We reserve the right to increase the benefit fee up to a maximum of 1.50% at any time on or after the 7th annuity anniversary on existing contracts. This would increase the total annual product charge to a maximum of 2.60%. Note: There is also an additional fee for the AST Multi-Sector Fixed Income Portfolio.
What do I need to consider when investing in the Prudential Defined Income VA?
Fixed income investments are subject to risk, including credit and interest rate
risk. Because of these risks, a subaccount's share value may fluctuate. If interest
rates rise, bond prices usually decline. If interest rates decline, bond prices
An investment in an exchange-traded fund involves risks similar to those of investing
in a broadly based portfolio of equity or debt securities traded on exchange in
the relevant securities market. The investment return and principal value of ETF
investments will fluctuate over time. ETFs that offer leverage or that are designed
to perform inversely to the index or benchmark they track (or both) are highly complex
financial instruments that are typically designed to achieve their objectives on
a daily basis. Due to the effects of compounding, their performance over longer
periods of time can differ significantly from the performance (or inverse of the
performance) of the underlying index or benchmark during the same period of time.
Issued on Contracts: P-BBND(2/13), P-RID-LI-DB (3/13) et al. or state variation thereof.