Making Sense of Variable Annuity Fees and Charges | Brighthouse Financial
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  • 3-Minute Article
  • |
  • Jun 28, 2018

Breakdown of Fees and Charges For a Brighthouse Financial Variable Annuity with FlexChoice Rider

Understand the common fee structure of a Brighthouse Financial Variable Annuity with the optional FlexChoice rider.

A hopeful retiree is talking to a financial advisor featured in an article about variable annuity fees

People deciding whether an annuity makes sense for their retirement plan can find themselves in new territory. As a hybrid financial product with both insurance and investment characteristics, a variable annuity provides unique benefits and features — some of which carry fees or charges. If you are considering an annuity, understanding the value you receive for each fee and charge can help determine whether it’s a good fit for your financial plan.

A financial advisor is an important resource for this assessment and can offer professional expertise to help compare annuity options and identify the right product for an individual’s needs. To help inform the conversation with your advisor, here is an overview of common types of annuity fees and charges and the potential benefits an annuity owner can receive in exchange for the added costs.

A Breakdown of Common Fees and Charges

A helpful way to consider annuity fees and charges is to understand that each one is tied to a feature or benefit that the annuity owner receives in return. While each annuity company establishes its own costs for providing these features and benefits, there are specific categories of fees and charges typically found in variable annuity products.

To illustrate the most common fees and charges associated with a variable annuity, here is a breakdown of the fees structure for a Brighthouse Financial variable annuity with the optional FlexChoice Access rider:

Standard Fees and Charges
Type Definition
Annual Contract Fee Covers contract maintenance and is deducted on the contract anniversary.
Mortality and Expense and Administration Charge Covers the insurance company’s cost for guaranteeing to provide lifetime income annuity payments or a standard death benefit if the unexpected happens.
Fund Expense Fee Similar to the charges assessed by mutual fund companies for managing mutual funds, these fees are imposed at the fund level and pay the investment firm for the fund manager’s expertise and other expenses.

 

Fees and Charges for Optional Features
Type Definition
FlexChoice Access Living Benefit Charge Pays to assure lifetime income payments off of the Benefit Base, regardless of the performance of the investments selected.
Optional FlexChoice Access Death Benefit Charge Pays for additional protection.
Withdrawal Charge The insurance company may impose a withdrawal charge on any amount that exceeds the annual free withdrawal amount in the first years of the contract for each purchase payment. The charge declines over time and disappears after a certain number of years. Example: 7%, 6%, 6%, 5%, 4%, 3%, 2%, 0%.

A Focus on Value Helps Research Annuity Options

While each annuity carrier’s fees and charges will vary, knowing these common categories can help people prepare for a conversation with their financial advisor about annuity costs. If you are considering a variable annuity, talk to your financial advisor about the feature or benefit tied to each fee or charge and ask how those benefits can add value to your retirement plan. This value-based analysis can lead to more informed decisions about the annuity products that make sense for your financial needs.