Suze Orman Flags Variable Annuity Death-Benefit Catch as Fees Erode Returns

Personal finance commentator Suze Orman said variable annuity principal guarantees are real but only trigger at death, warning buyers the floor is a death benefit, not a promise the account will hold its value when the owner wants the money. "You will never get less than what you originally put in," Orman said. "Now that is true, but you have to die for that to be true." The SEC and FINRA note that tax deferral, the product's main selling point, offers no added benefit inside a 401(k) or IRA. Buyers instead pay layered fees: base contract charges of about 1.25% annually plus 0.15% administration, per the SEC. Prudential (PRU) and Equitable (EQH-C) 2026 prospectuses list base charges up to 1.384% and 1.20%, with portfolio expenses as high as 1.41% and 3.04%. On a $250,000 account over 20 years at 7%, a 2.25% all-in cost leaves roughly $632,000 versus $958,000 at 0.05%—a $326,000 gap.