Variable Annuities and the Falling Dollar

by David Jenyns on August 18, 2008

Variable annuities are a popular investment option, especially for conservative buyers who want insurance against the risk of a falling dollar value.

Two major life insurance companies have been in the forefront of the battle over the granting of legislative approval for life insurance companies to sell variable annuities. Pitted against the sale of variable annuities by life insurance companies is the nation’s largest mutual life insurance company, the Metropolitan Life Insurance Company.

Its position is that under standard forms of contracts issued by life insurance companies the company assumes the risk. College professors could divert up to half of their retirement contributions into a variable annuity kind of contract. A number of other groups, including the New York Stock Exchange, the Investment Bankers Association of America, The Investment Company Institute, and the National Association of Securities Dealers, argue that a variable annuity contract is, in essence, an investment company share in disguise.

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