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URL:  http://boards.fool.com/variable-annuities-23100893.aspx

Subject:  Variable Annuities Date:  9/29/2005  8:00 PM
Author:  downisland Number:  36 of 72

My brother just bought a variable Annuity. The broker claims it has a 7% living guaranty which insures the annuity will grow at 7% per year regardless of how his mutual funds perform inside the annuity. Also a quarterly ratchet feature that locks in the performance of his mutual funds- he can use it to lock-in to determine his income stream.
I told my brother about a recent Kenneth Fisher article which said the only people who make money on annuities are the insurance companies issuing them. My brother claims that only applies to equity index annuities and that his is a variable annuity.
Ken Fisher pointed out that profits from annuitites are taxed as ordinary income instead of the 15% tax on capital gains and dividends. My brother claims he paid no fees for this product. It sounds too good to be true. He must leave it for 10 years but they guarantee a minimum of 7% a year. I'd like to know a little bit more about annuities like this if anyone has some info. Thanks
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