Some insurance salespeople push annuities for tax-deferred plans by playing on people's fears and ignorance. They tout a variable annuity's "death benefit"--the guarantee that if the investor dies prematurely, her heirs will get out at least as much as she put in.

The chances are pretty remote that you would happen to die while the market was down--and you can buy life insurance directly without all that annuity hoo-ha. Meanwhile, the extra fees cut into the investor's overall return.

Unfortunately, thousands of teachers and other public employees have little or no other choice in their workplace retirement savings plans, because the government agencies that employ them refuse to give them access to mutual fund options. Employees who are stuck in this situation should agitate for change.

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Q. I purchased a non-qualified variable annuity two years ago. Due to competition, the company is now offering a similar variable annuity with an expense charge about 0.5 percentage point less than the annuity I purchased. That difference would save me several thousands of dollars per year. I contacted the company about converting to the less costly annuity without incurring the surrender charges, which are currently 6% of the annuity purchase value. The company replied that such a change could not be made, due to IRS tax laws, and that they were reluctant to set a precedent for other owners of similar annuities. Are they correct? If not, do I have any options or legal recourse?

A. They must be referring to IRS Code B.S. 101. There's no such tax law, only the company's reluctance to lose those thousands of dollars you don't want to pay. That's apparent from the nonsensical response they gave you: If such an exchange were really against the law, why would they worry about setting a precedent?

They've got you, you know. Unless you're willing to give up a good chunk of your money to go elsewhere, they know they can continue to milk you for that half a point. That 6% surrender charge is your clue that this company is not particularly interested in letting you go until it's had its way with you, if you know what I mean.

But you have performed a public service by being an object lesson. Readers, this is what can happen to you if you rush into buying a variable annuity without checking out all the fine print--and what the competition offers. Even if you get a great deal at the time, the deals can get better after you purchase. If your surrender charges are high, however, you have little negotiating leverage with your company, because they know you're unlikely to leave.

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Q: I'm a longtime insurance agent who hears a lot of incorrect or incomplete information about variable annuities, but you do a very fair job of explaining the pros and cons. I'd like to hear your point of view on the suggestion by some elder law attorneys that a second opinion should be required before an annuity could be sold. In theory, that's a good idea, but in reality the consumer is likely to end up with another person with different, incomplete information. Ultimately (as you always point out), we have to take responsibility for going through the pain of learning about what we're doing. People want someone else to make the decision for them instead of making their own.

A: The attorneys' suggestion is that a second opinion be required for annuity sales to people over age 60 because there is so much abuse in that area. The same day you sent your e-mail, in fact, I received a handwritten letter from an 89-year-old man who'd been sold two variable annuities, one by his bank and another by a seminar promoter. It's rather unlikely he will live long enough for the tax-deferred benefits of the annuities to outweigh their substantial extra costs.

You're right that there are far too few qualified, objective people to make getting a second opinion a requirement for all annuity sales. Instead, consumers should be encouraged to learn all they can; one place to start is the insurance primer at http://www.latimes.com/insure101.

You're also right that we're responsible for our own choices. Still, seniors can be incredibly vulnerable in financial matters, which makes it even more important that they get a second opinion. Older people would be wise to consult a fee-only financial planner or an elder-law attorney before investing in an annuity. If they have enough money to invest, they can spend a little more to make sure the annuity is a good fit for their situation.

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Q: I am an insurance agent with 27 years' experience who just finished reading your June 4 Money Talk column about a 50-year-old who was being advised by an agent-in-training to convert her 401(k) plan to a variable life insurance policy in order to later get tax-free income. Of course, if this is true, it would be an absurd transaction, as you correctly pointed out. I would be surprised if the suggestion was in context and, certainly, if it was, the trainee could never have gotten such a transaction through a company. The risk of a lawsuit would have prevented it. You go on to condemn the whole industry based on this anecdote. It does seem that you have an ax to grind with the insurance industry. I would just knock the heck out of any unethical action that one individual took and not blame all of us for the actions of some ignorant and/or unethical individuals.

A: I wish you could read my mail for a week.

I used to take the approach you suggest, but after six years of covering the insurance industry, I've changed my mind. Something is seriously wrong, and too many companies seem to be complicit in letting inappropriate sales continue.

I get a couple of complaints a month, at most, from readers about brokers. I get a few every year about accountants or certified financial planners who screw up. I get letters and e-mails almost every day from readers who have been inappropriately sold some insurance product.