Variable Annuity Fraud is On the Rise

Variable annuities are one of the fastest growing investments sold by brokers. Brokers sell more than $100 billion of such annuities every year.

Why? Because they earn high commissions to sell them, 4 to 6 percent of the amount invested. Thus, if a bad stock broker talks someone to into selling a $700,000 IRA and buying a variable annuity instead, the broker will earn an immediate commission of about $30,000.

Annuities are marketed as safe investments and as tax shelters, but the AARP and publications such as Newsweek, The Los Angeles Times, and the Chicago Tribune have warned that variable annuities often make poor investments and are sold using deceptively marketing techniques.