Financial & Estate Planning

Variable annuities have received negative publicity in recent years, which may keep individuals from buying them. Although variable annuities have their drawbacks, as do all types of investments, they also offer advantages.

Variable annuities have been called mediocre investments, with high price tags. They may be compared, unfavorably, with mutual funds.

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However, many forms of variable annuities are available, with a variety of investment options. Performance has varied, as it has with mutual funds. If investors choose a variable annuity with high-quality investment options (“subaccounts”), and choose among those options carefully, the results can be comparable to those from a well-chosen portfolio of mutual funds.

As for cost, recent competition has been driving down the cost of variable annuities. Some have extremely low charges now while sales commissions also have dropped.

The advantage is that variable annuities offer tax deferral and withdrawals may be delayed until you retire and your tax bracket drops. They also may provide guarantees against investment losses.

As with any investment, consider carefully first.