Maybe you're comforted by the death benefit that VAs offer, or you like the annuitization feature, or you've exhausted all other tax-deferral options. What are the keys to successful VA investing?

First, buy for the long term. Remember, a VA needs time to overcome the fact that its gains are eventually taxed at the higher income rate, not the lower capital-gains rate. Furthermore, most VAs impose hefty surrender charges that start at 7%, decline each year, and vanish after a period of years.

Then, pay attention to how much you pay for a VA. Yes, the average VA levies higher fees than the average mutual fund, but some VAs cost much less. The low-cost leaders here--including Vanguard and T. Rowe Price--will be familiar names to thrifty mutual fund shoppers. In fact, their variable annuities charge less than many mutual funds, insurance wrapper and all.

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