Term: L Share Annuity Class
Type: Variable annuity share class
Used in: Retirement and investment planning
Focus: Shorter surrender period, higher ongoing fees
Compared to: B Shares, C Shares, A Shares
Definition
An L Share is a class of variable annuity that offers a shorter surrender charge period — typically 3 to 4 years — in exchange for higher annual fees. It appeals to investors who want more flexibility and early access to their money without long-term penalties, though it often comes with higher mortality and expense risk charges.
Key Features
- Shorter Surrender Period: Usually 3–4 years
- Higher Annual Fees: Compared to B and C share annuities
- Increased Liquidity: Quicker access to funds without early withdrawal penalties
- Same Investment Options: As other annuity share classes
- May Reduce Commission Trails: For the advisor after the surrender period
Common Use Cases
- Investors seeking short-term annuity access
- Retirement plans needing liquidity within 3–5 years
- Clients with low tolerance for lock-up periods
- Situations where long surrender schedules are unattractive
Benefits or Advantages
- More flexible than longer-term annuity classes
- Allows early withdrawals with fewer penalties
- Suitable for near-retirees wanting growth + liquidity
- Can complement laddered annuity strategies
Examples or Notable Applications
A retiree planning to use annuity funds within a few years may opt for an L Share. Used when clients want insurance protection but dislike long-term commitment. Often compared to B shares (7–10 year surrender) and C shares (no surrender, higher fees).
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This post is for informational purposes only and does not constitute investment advice or product recommendations.