Variable annuities: Buyer beware

Variable annuities promise it all, and millions are buying in. Before you join them, you'd better know what's on the other side of the rainbow.

(MONEY Magazine) -- Chances are, you've already heard the pitch from an insurance agent or a financial adviser. And if you've been feeling anxious about the stock market (who hasn't?), it probably sounded pretty compelling: "Invest in stocks while protecting yourself from another 2008, with a guaranteed minimum return that provides income for the rest of your life!"

This promise propelled sales of variable annuities to $120 billion in the first nine months of 2011, already the highest yearly since 2007. The annuity itself -- a tax-deferred investment account with an insurance wrapper that provides a death benefit -- is only part of the appeal.

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