TAKING STOCK: MetLife Annuities

Dear Mr. Berko:

I was going to invest $80,000 in a MetLife variable annuity that guarantees 6 percent and 100 percent guarantee of my money forever. But a friend of ours has recommended the American Slovenian Catholic Union insurance company's variable annuity, which he says has better short- and long-term performance than MetLife. I want to send you both prospectuses, but I only have your email address. Each is about 200 pages and is very confusing and boring to read. So I want you to do a spreadsheet for me that outlines and compares the advantages and disadvantages of both policies. Our CD comes due next month, and I would like to have your analysis in the next two weeks. So please send me your address.

M.R., Kankakee, Ill.

Dear M.R.:

A close friend recently completed his will and named me as the executor. The will was 11 legal-sized pages of triple-spaced typing, and it disposed of $5.2 million in assets to family members, a couple of friends and charities. Several weeks ago, a realtor friend took me to dinner because in a very minor way, I helped him find a buyer for a modestly expensive home he had listed. The selling price of the home was $585,000, and the sales contract was only three pages. And if you want to spend $33,000 to purchase 100 shares of Apple, Inc. (APPL-$351), all you have to do is to tap a few keys on your PC and, zippity do-dah, in 30 seconds, you're an Apple man. So for the life of me, I fail to understand why ING, Hooligan National, New York Life, Sonic Insurance, The Met, General Atomics or AXA, etc., insist that you be given a single-spaced, 189-page booklet that copiously explains, discusses and iterates the terms and conditions of your purchase.

Now, I've heard of Slovenia, the American Slovenian Citizens Association and the American Slovenian Polka Foundation, and I know that the Embassy of the Republic of Slovenia is in Washington, D.C. But I have never heard of the American Slovenia Catholic Union insurance company. So, thank you for offering to send me a prospectus on their variable annuity, but don't bother because I lack the patience, fortitude and time to read it.

Nor do I wish to review a prospectus from MetLife, nor am I willing to outline a comparison of the two policies for your benefits. That's your agent's job. And I suspect if you quietly slip him 10 benjamins under the hat, he will do that comparison for you.

It's been my experience that the greater the number of pages in the prospectus, the more an issuing company may have to hide. I also believe that the trustworthiness of an insurer may be directly related to the size of the prospectus. If the prospectus contains myriad percentages, formulas and other complicated data then it's a given that the insurer expects future troubles and complaints from policyholders.

I think it's positively repellent and absurd for an insurance company to give an investor a 200-plus-page prospectus written by $1,000-per-hour lawyers. Your agent stands to earn a $6,400 commission, so make him earn it. Tell him to give you a letter on his firm's stationery that clearly reiterates every one of the verbal guarantees he mentioned, including that you can never lose money, that it's guaranteed to grow by 6 percent every year, that in 12 years your $80,000 will be worth $160,000 and that you can withdraw that $160,000 on demand. If all this is true, then he has every reason in the world to give it to you in letter form without any caveat, "ifs," "ands," "buts" or "maybes."


Please address your financial questions to Malcolm Berko, P.O. Box 8303, Largo, FL 33775 or e-mail him at mjberko@yahoo.com. Visit Creators Syndicate website at www.creators.com.

© 2011 Creators Syndicate Inc.

Published: Mon, May 9, 2011