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Variable Annuities: The Rest of the Story... Page 2

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If fees were the only difference, variable annuities would be at a slight cost disadvantage. But price is only a consideration in the absence of value. If price were the only factor we as consumers consider, we would all drive the lowest priced car and purchase the least expensive laundry detergent. The fact is, variable annuities offer features and/or benefits generally not available with mutual funds.

1) Fixed Accounts
Some investors like the security of a guaranteed rate of return for a period of their investment portfolio. With many variable annuities, investors can put some of their money into fixed accounts to provide this security. Most variable annuities will allow dollar-cost-averaging out of these accounts into the other stock and bond portfolios.

2) Guaranteed Death Benefit
Most variable annuities have a guaranteed death benefit that may provide investors with the confidence to invest in stocks or bonds without as much concern about how negative market conditions could affect their beneficiaries. Some even offer several choices of death benefits.

3) Multiple Money Managers
Diversification among money managers allows investors the ability to take advantage of different investment styles. Some variable annuity subaccounts are managed in a fashion similar to load mutual funds, some to no-load funds, and some to institutional accounts generally not available for purchase by retail investors. This allows an investor the ability to structure a portfolio best suited to meet their needs and objectives within one policy.

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