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Thanks for the bevy of great responses to this thread. Much to ponder. I had mentioned at thread 1 that I would try to dig out some of my references ( you know, those little gems you cut out of mags and keep in a file folder). Here is one of my favs:

In an article entitled "Ten Things Your Variable-Annuity Seller Won't Tell You" (SmartMoney, November 1997, page 167) they talk about some compelling stuff.

I will try to raise a point or two but not all at once.

Are annuity sales commissions 5 to 7 percent? If so, aren't those about twice what your broker gets for peddling a mutual fund?

Are the approximate 1.3% insurance fees (mortality and expense-risk-fees) assessed on just your principal or upon your earnings too? I gather that they are most often based upon your earnings too.

The article cites references that suggest the cost to the insurer of providing a death benfit ranges between 0.05 and 0.10 percentage points per year. The unspent balance is apparently profit to the company to pay commissions, etc., etc..

Among other related issues (too many to go into in one post) are the tax benefit myths, why your kids may hate you, being abducted by aliens before triggering a death benefit, lock in, and when are you too old for the product. I think this is one of those gems that might be worth a visit to the local library to review. I havn't checked the SmartMoney web page (if they have one) to see if the article is accessible there.

Again, thanks for all the thoughtful response to the thread.

Fool on


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