February 4, 2004

 

 

Letters to the Editor

The Richmond Times-Dispatch

P.O. Box 85333

Richmond, VA 23293

 

To the Editor:

 

We are writing in response to the recent article entitled "Annuities: Are They a Good Idea" by Iris Taylor, which appeared in The Richmond Times-Dispatch on January 25, 2004.  We are concerned that the article provides a number of incomplete and inaccurate statements and could, therefore, potentially mislead your readers about variable annuities, a valuable financial product that is helping Americans prepare for retirement. 

 

The article asserts that variable annuities are too expensive when compared to other investments, such as mutual funds. While variable annuities generally have somewhat higher fees than mutual funds, these additional fees pay for the insurance benefits they offer that are not available with other investments.  These benefits include a death benefit that guarantees that the owner’s beneficiaries will receive at least the amount of money that was invested, living benefits that guarantee that the contract value will be at least equal to the initial investment after a specified number of years, and the right to elect annuity payments that are guaranteed to last for life.

 

The article attempts to minimize this last guarantee by asserting that if you annuitize and die in a car crash after one month, “your money is gone, leaving your heirs with nothing.”  In fact, people can choose annuity payments that will last for the longer of their life or a specified period, such as 20 years, or for the joint lives of the owner and his or her spouse.

 

Sincerely,

 

 

Mark J. Mackey

President & CEO

 

cc: Iris Taylor