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Beware of Receiving Bonuses in Variable Annuities
The SEC has launched an investigation into the use of bonuses to peddle variable annuities to customers. That's because many of these products carry higher fees, lock up buyers for a decade due to high surrender charges and may have poor performance.
The "bonus" comes in the form of an automatic 3% to 4% addition to the value of the account at the time of purchase.
American Scandia pioneered the bonus product in 1996. American Express, Manulife (a unit of Manufacturer's Life Insurance Co. of North America), Pacific Life Insurance, and ING Group also sell the product.
Source: Wall Street Journal, January 25, 2000
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