Annuities

I wrote a list of 8 'cons' to VAs at

Jefferson National VA may be appropriate for specific situations, especially if one believes the favorable treatment of dividends and capital gains is going away, and will be taxed at ordinary rates. In that case, This VA can be thought of as an unlimited, non-deductable IRA, more or less (of course there are still differences, I'm speaking to the non-tax deduction going in, full income tax on growth coming out). Others have insurance wrappers with total fees as high as 3%/yr. Googling on [Scott Burns Variable Annuities] will return many of his articles holding this view. At the other end, an immediate annuity (see ) can be a good way for an older person to get a high return, with no principle left on their passing. I have an 80yr old woman who is afraid to spend. She had longevity in her family, and will likely live past 90. An immediate annuity will give her $11900/yr on $100K. If she simply put that in CDs at 5%, and withdrew the same $11,900/yr, she'd run out of money at 90. If she passes before 90, the insurance company benefits, much after, and they lose out. That's a brief example of how the immediate annuity works.JOE