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Sales of Variable Annuities Fall, But Prices Increase

Despite a 15% drop in sales of variable annuities over the past year, Matt Ackermann from Financial-Planning.com reports that several insurers are actually increasing their prices! Some are even predicting that variable annuity prices may double in the near future.

While it may not make sense to increase prices when demand has fallen, the director of annuity firm Kehrer-Limra chalks it up to the increasing cost of a variable annuity’s benefits and guarantees. He also says that many companies fear that the recession will continue for a long time, making it even harder to recoup the cost of providing investors with guaranteed minimum income benefits in a bad stock market.

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