Other types of accounts offer tax deferral, and more besides. Tax-deductible IRA contributions, for example, lower your current taxable income in addition to sheltering future gains from taxes. The same goes for 401(k) contributions, and you likely get an employer match as well. Of course, there are limits to how much you can place in such tax-sheltered accounts. Some investors use VAs once they've contributed all they can to their various retirement accounts.

But even once you've met those limits, the VA isn't your next logical choice. Set up a Roth IRA if you qualify. Like the VA, contributions are taxable. Unlike the VA, appreciation is not only tax-deferred, it's tax-free even after you start making withdrawals. And a Roth is much more flexible--you can withdraw contributions for any use at all. With the VA, you'd incur an IRS penalty and likely a surrender fee as well.

So you've invested as much as you can in your 401(k) and are socking as much into a Roth IRA as the IRS will let you, and you're still clamoring for shelter. What other options do you have?

Consider tax-managed mutual funds. And buy-and-hold stock investors can minimize taxes by sticking with high-quality non-dividend-paying stocks--if you don't sell, you won't trigger a taxable event.

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