Here is a couple with some $160,000 in the husband's profit-sharing plan. A broker told them about a guaranteed six percent annual return. He explained all the wonders of a variable annuity, and the couple's eyes glistened with what appeared to be a highly lucrative, risk-free investment.

Spin the dial two years and that $160,000 is now down to $70,000.

Want to hear more? There is this guy who put half a million dollars in a variable annuity in the year 2000 and today, it is around $200,000.

We all know that a lot of us (and I am included here) have lost a considerable amount of money in the stock market over the past few years but regulators claim that too many "aggressive" insurance agents and brokers have oversold too many people on variable annuities, which are often described as mutual funds wrapped in an insurance policy. They point out that the public has not really be cautioned about the inherent risks or even explained that these highly complex contracts cart along large commissions, hidden fees, and certain surrender charges if money is withdrawn too soon.

From 1995 to 2000, annual sales of variable annuities soared from $49.5 billion to $137.2 billion. Many senior citizens I know in Florida say that they heard about them at various retirement planning seminars, complete with free chicken dinners. Baby boomers, of course, looking toward early retirement, rolled over millions from employee profit-sharing plans into variable annuities. Gone. All gone.

The Securities and Exchange Commission points out that variable annuity complaints far outpace all other securities complaints. Most allege the investments were unsuitable for the financial conditions of the buyers. Susan Wyderko, director of the SEC's investor education section, says she received more than 400 consumer variable-annuity complaints in 2002, a 45 percent increase over the prior year. And this, she adds, is only a small fraction of complaints nationwide.

The big thing here is that seniors who believed their investments were indeed guaranteed were surprised to learn that the "guarantee" feature of a variable annuity requires them to die first.

In fact, Wyderko says that some eager insurance salesmen even went into nursing homes to induce 80-year-olds to transfer money from safe CDs into variable annuities that tied up their money for years.

What's also interesting here is that much of the public doesn't realize that insurance companies invest their money in stocks, much less in volatile portfolios that reap sales agents up-front commissions of seven percent, or more. In effect, these high commissions have been the driving force behind variable annuities.

Regulatory control? It's being advocated although admittedly we have many state and federal laws on the books that do provide ways to prosecute the wrongdoers.

Keep in mind that annuities of various types are sold by insurance companies through brokers and agents. When you purchase an annuity, the insurer agrees to make periodic payments to you in the near or distant future, depending on the contract, and there is a charge for managing your money. In a variable annuity, the insurer places your money in its own sub-accounts that invest in mutual funds.

To be fair, variable annuities have several attractive features: investment returns are tax-deferred, money can be moved from one sub-account to another without triggering tax consequences, and a death benefit. On the other side of the coin, there are high fees and surrender charges for early withdrawals, which can easily nullify many advantages.

And, inasmuch as individual retirement accounts and 401(k)s are also tax-deferred, there is certainly no big tax advantage from taking money out of your plan at work and rolling it into a variable annuity. In fact, regulators maintain that variable annuities are logical only for consumers willing to invest for at least 10 years.

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