Most annuities have no up front fees. The fees are generally what is called a "deferred sales charge" or a surrender fee, charged in the event the annuitant takes out more than 10% of the balance in a given year, and only for the first 7 to 10 years in most cases. Variable annuities also charge a mortality fee and seperate account fees (which are charged to the values of the seperate accounts just like the internal charges for mutual funds) There are some annuities that actually deposit a bonus amount upfront to the contribution of the annuity (which may be forfeited if withdrawn early).

Variable annuities generally don't protect one against market decreases (except in the case of the death of the annuitant) unless the owner chooses to use the money market or fixed interest seperate account. Think of a variable annuity like money in your company's 401(k). You can put it into any of a number of seperate accounts depending on your objectives, and can move it from account to account without incurring a taxible event. When money is withdrawn it is subject to ordinary income tax to the extent that it represents gain - on a last in - first out basis. There are many variations available that have "gimmicks" that may or may not appeal to any given person, but they can be valuable planning tools. Pick a well known, large national company and do your homework. Remember, the sales person may be honest and ethical but he/she stands to make about $6,000 or more, on your $200,000 investment, so they might not disclose all the potential downsides.

Variable from a Variable Guy
 

I actually sell annuities including variables. While I often disagree with Suzie, I do believe that VAs are often sold to the wrong clients. In fact, in my opinion, most all types of variable and index annuities are oversold. I have seen huge portions of portfolios invested into various annuity contracts usually because the investor perceives a benefit that is simply not there.

Still, most investors who owned VA's and index annuities through the crash of 08 / 09 were thrilled to have the protection they offered.

Bottom line, VA's can be good, but you should know what you are getting in to, understand the expenses, and surrender penalties and what benefits are offered. Most important, make sure you know what the guarantees mean because most investors don't actually understand how these "benefits" do and don’t protect their portfolios.

I just rolled over to the Prudential product.

The very best explanation of the various types of annuities I have seen can be found at seniorannuityalert.com. They have short video presentations (7 in all) on each type of annuity with pros and cons. They present it in a very easy to understand manner. Sounds like the "hybrid" is the best for us seniors. I do not have an account with this group; just happened upon them by chance.

ok thanks

We were not told the whole story about these annuities....to high fees and we lost money in these....I have since switched to fixed index annuities and have not lost one dime.....My advisor is David Blackston at Sorensen Tax Advisory group....I highly recommend him...his expertise saved us alot of money and helped us with our estate issues: