Friday, May 01, 2009


Beware of VAs' Rusty Nails

Many advisors distrust variable annuities, and not without reason. Prospectuses for these products tend to be long, dense and convoluted. Even securities lawyers lose all sense of jurisprudence after reading too many contracts in one sitting.

And it's not as if variable annuity benefits are getting sweeter. Thanks to the bear market, countless variable annuity contracts with living benefits are "out of the money," i.e., a losing proposition for the life insurance companies that issue them. To limit their exposure, insurers are raising prices and reducing guarantees.

On the other side of the trade, the consumer side, these products are now very much in the money for the people who bought them a few years ago. If anything, the bear market has demonstrated their potential for downside protection and guaranteed retirement income in horrendous market conditions...

Bank Investment Consultant: Beware of VAs' Rusty Nails

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