The Wall Street bullies want you to believe that they have your best interest in mind. Remember if what the insurance companies are protecting you from actually happens, they will be unable to honor their promises. You cannot avoid all risks with your investments you just take different kinds of risk. These risks are all real. Some worse than others.

Have you bought a variable annuity yet? If you’re a baby boomer and your answer is no, get ready for the hard sell. The promoters of these savings vehicles will prey on your insecurity about not having enough money for retirement to get you to sign up for what could be a costly investment. Even if you already have a variable annuity, someone may try to convince you to trade in your existing contract for one with new bells and whistles — in which are buried higher fees. The problem with variable annuities is they are often a high-cost answer to a problem that may have simpler, cheaper solutions, such as fully funding your tax-deferred retirement accounts or assembling a portfolio of reliable dividend-paying stocks. Still, through Sept. 30, 2004, variable annuity sales were $98.4 billion, about 4% higher than during the same period in 2003. And it’s insurance salespeople, not Wall Street brokers, who are making most of the sales. Financial planners in particular have been cool to the product. Variable annuities “are tax-inefficient, difficult if not impossible to understand, and have high costs,” says Warren McIntyre, a financial planner in Troy, Mich. 

The sales pitch of both fixed and variable annuities rely on the consumers fears. These agents point to the volatility of the stock market and offer a product which deals with this fear. The cost for this insurance is excessive and unnecessary. It jeopardizes your financial future.

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