Dear Annuity Guys®,

I asked my broker about annuities and he is recommending a variable annuity^# from @%#^#. What is your opinion of this annuity?

Larry T.

Watch as the Annuity Guys® discuss who should choose or even consider a variable annuity^#?

**Guarantees, including optional benefits, are backed by the claims-paying ability of the issuer, and may contain limitations, including surrender charges, which may affect policy values. During this segment, Dick and Eric are referring to Fixed Annuities unless otherwise specified.

Typically, we try and provide an answer that highlights the pros and cons about the specific annuity in question. However, there are some aspects regarding variable annuities^# in particular that need to be made clear prior to even considering variable annuity^#.

Here are fourteen questions to consider prior to selecting a variable annuity^#.

1. Is any annuity really the right choice for you?
2. Are you comfortable with your principal being at risk?
3. Is your reason for buying a variable annuity^# for growth and/or tax-deferral?
4. Are you planning on using this annuity for lifetime income?
5. Is your advisor/broker an annuity specialist? (Did they offer and discuss various types of annuities?)
6. What are the fees – including the hidden fees, that do not appear on the statements?
7. Do you understand the pros and cons associated with living benefit riders?
8. Will you have adequate liquidity?
9. How many ways and how soon can you access your money?
10. What is the surrender period and the associated charges?
11. What are the costs associated with the investment accounts?
12. Who is responsible for selecting the investment accounts?
13. What is the minimum **guarantee?
14. What is the death benefit?

These are a few of the topics we would recommend discussing prior to finalizing a variable annuity^#. Due to the popularity of these annuities, they are frequently highlighted in the media – for both their positives and mostly negatives, for the way in which they are abused. If you are in the market for or have been proposed a variable annuity^#, please be sure to read this article from the Securities and Exchange Commission on variable annuities^#.

Variable Annuities: What You Should Know

Variable annuities have become a part of the retirement and investment plans of many Americans. Before you buy a variable annuity^#, you should know some of the basics – and be prepared to ask your insurance agent, broker, financial planner, or other financial professional lots of questions about whether a variable annuity^# is right for you.

This is a general description of variable annuities^# – what they are, how they work, and the charges you will pay. Before buying any variable annuity^#, however, you should find out about the particular annuity you are considering. Request a prospectus from the insurance company or from your financial professional, and read it carefully. The prospectus contains important information about the annuity contract, including fees and charges, investment options, death benefits, and annuity payout options. You should compare the benefits and costs of the annuity to other variable annuities^# and to other types of investments, such as mutual fund^{^}s.

What Is a Variable Annuity?

A variable annuity^# is a contract between you and an insurance company, under which the insurer agrees to make periodic payments to you, beginning either immediately or at some future date. You purchase a variable annuity^# contract by making either a single purchase payment or a series of purchase payments.

A variable annuity^# offers a range of investment options. The value of your investment as a variable annuity^# owner will vary depending on the performance of the investment options you choose. The investment options for a variable annuity^# are typically mutual fund^{^}s that invest in stocks, bonds, money market instruments, or some combination of the three.

Although variable annuities^# are typically invested in mutual fund^{^}s, variable annuities^# differ from mutual fund^{^}s in several important ways:

First, variable annuities^# let you receive periodic payments for the rest of your life (or the life of your spouse or any other person you designate). This feature offers protection against the possibility that, after you retire, you will outlive your assets.

Second, variable annuities^# have a death benefit. If you die before the insurer has started making payments to you, your beneficiary is **guaranteed to receive a specified amount – typically at least the amount of your purchase payments. Your beneficiary will get a benefit from this feature if, at the time of your death, your account value is less than the **guaranteed amount.

Third, variable annuities^# are tax-deferred. That means you pay no taxes on the income and investment gains from your annuity until you withdraw your money. You may also transfer your money from one investment option to another within a variable annuity^# without paying tax at the time of the transfer. When you take your money out of a variable annuity^#, however, you will be taxed on the earnings at ordinary income tax rates rather than lower capital gains rates. In general, the benefits of tax deferral will outweigh the costs of a variable annuity^# only if you hold it as a long-term investment to meet retirement and other long-range goals.[…Read the rest of the article from the SEC]

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