Let's take a closer look at the death-benefit guarantee. For one thing, the benefit probably doesn't make much sense for long-term investors. Market history suggests the odds are slim that the dollar value of your investment account will shrink over 10 to 30 years. That's five times more than the benchmark fee that Milevsky and Posner came up with for men, and nearly 10 times the benchmark fee for women. In addition, other fees are associated with variable annuities, such as administration fees, records maintenance, and mutual-fund expenses.
Annuities have a long history.
In ancient Rome contracts called annua promised an individual a stream of income in return for an upfront payment. Governments in England, France, and several other countries sold annuities in place of government bonds in the 18th century. In 1759, Pennsylvania chartered the Corporation for the Relief of Poor and Distressed Presbyterian Ministers and Distressed Widows and Children of Ministers to provide survivorship annuities for the families of ministers. It's safe to say that annuities are not about to disappear. And that's good, because some low-fee variable annuities are offered in the marketplace.