If you’re reading this, you probably know the definition of a variable annuity: the owner invests a lump sum of money in an account that resembles a mutual fund, and ultimately either withdraws the money or annuitizes it to create a steady income stream.

These products have not been popular with financial advisors in recent years, due largely to their expense, their low rate of return, and the frequent fees that get added on. However, in an investing environment where many consumers are terrified of risk, there can be a time and a place for such a product.

Variable annuities that feature living benefits can be a good fit for gun-shy investors who need a guarantee to feel comfortable investing (not an uncommon demand these days). The key is to ensure that you’re investing aggressively enough to earn higher returns that will offset the higher fees of this secure (but expensive) product. 

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