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My dad is a 77 year old retired engineer who unfortunately is not very savvy about his financial matters. Recently I discovered that ~6 months ago, his financial advisor rolled over his entire IRA into a Polaris variable annuity at AIG Sun America. My limited understanding of variable annuities is that their only major advantage is tax-deferral of any gains vs. many disadvantages, one of which is the added cost of the "insurance" load - which requires decades of retention in order for variable annuities to overcome. In reading the glossy AIG Sun Polaris prospectus, it seems like this product is trying to capitalize on the elderly's fear of loss of capital - at a high annual cost of 1.77% on top of the operating costs of the underlying portfolios 0.6-2.38% for a whopping 2.37-4.15% annual load (vs. ~0.5-1.0% for Vanguard Variable Annuity).

Am I missing something or had my dad just been had? AIG Sun America's advertising claim to be "the retirement specialist". How could they have legitimately created a variable annuity targetted at the elderly?

Appreciate comments and suggestions
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