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No guarantees on variable annuity returns

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Q: In a recent article, you wrote about variable annuities with a guaranteed minimum withdrawal. (5/16/05 issue) Would a guaranteed minimum income benefit (GMIB) variable annuity be better? V.G.

A: Although the exact terminology varies from company to company, the "guarantee" that annuity issuers typically pitch pertains to the income that will be paid out to the beneficiary, either for a specified time or for life. In effect, this feature provides a stream of income, regardless of investment performance. On the other hand, a fixed annuity, which is often the choice of more conservative investors, provides a guaranteed rate of return. Tip: Two major players: John Hancock (www.johnhancock.com) and The Guardian (www.guardianinvestor.com/public/products/cxc_variable.aspx).

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