Tim Novatnack, an advisor at Fulton Bank in Danville, Pa., fondly remembers the good old days of the variable annuity business. "I can remember a few years ago when carriers like AXA and MetLife were in a rider war, seeing who could offer the most generous guaranteed lifetime benefits at the lowest cost," he says. It was a time when advisors could cherry pick the best deal and clients could walk away with assured pensions on the cheap. "Those days are gone now," he says wistfully, noting that today it feels like the industry has made an about-face. That is, the insurance carriers that offer variable annuity products are competing "to see who can lower their rider benefits and raise the cost the quickest."

Numbers tell part of the story. Variable annuity sales, according to the insurance industry research outfit LIMRA, fell by about 4% to $35.5 billion between the first quarter of 2012 and the first quarter of 2013 (though they actually rose a nominal 1% from the fourth quarter of 2012 to the first quarter of 2013). That year-to-year drop marked the sixth consecutive quarter of year-to-year declines for variable annuities.

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