Article: Mutual Funds Versus VAs; Do the higher costs of variable annuities and variable life insurance products cause them to underperform mutual funds? Not always.(Retirement Edge)

Byline: Craig L. Israelsen

It's no secret that variable products cost more than mutual funds. The average annual expense ratio for variable annuities (VA) is about 2.4% (or 240 basis points), compared with 1.5% for variable universal life (VUL) and variable life (VL) policies.

Compare those costs with the average annual expense ratio for stock mutual funds of 1.4% and 1.1% for bond funds, producing an overall average of 1.3% for all 26,529 stock and bond mutual funds in the Morningstar Principia database.

Variable products are contracts of insurance as well as investment products that use mutual funds as the underlying investment vehicle. ...

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