NOW THAT we've stuffed you with reasons not to buy variable annuities, let us give you a few examples of instances where annuities actually make sense.

If you're retired and have barely enough money to meet your annual expenses or fear that you will outlive your capital, then consider purchasing an immediate annuity. You'll get a guaranteed income stream, even if you outlive your annuity's principal. Of course, if you die tomorrow, the remaining balance of the annuity goes to the insurance company. For some, that's a risk worth taking to gain some peace of mind.

Young Trader Saving for Retirement

If you are under 40, trade mutual funds several times a year and have maxed out your 401(k) and IRA, a variable annuity might make sense. Why under 40? You may need more than 20 years for the benefit of an annuity's tax deferment to exceed the benefit of the long-term capital gains rate on profits from selling your mutual funds. (Remember, annuities are taxed at ordinary-income tax rates, which run significantly higher than long- term capital gains tax rates.) The lower your tax bracket in retirement, the better the case for annuities becomes.

Why a trader? Because if you did that kind of trading in a taxable account, you'd get hit with short-term capital gains taxes at rates that match income tax rates. In an annuity, your money can continue to compound until you withdraw it.

Switching and asset rebalancing are among the great advantages of a variable annuity. Most annuities allow you to switch investments up to 12 times a year for free, and after that it's about $10 a switch. If you would like to take advantage of this, make sure you pick an annuity with plenty of attractive subaccounts. Or, better yet, one with no surrender charges. Otherwise, you are likely to be hit with a fee of as high as 9% if you try to move your money to another annuity provider (a so-called 1035 transfer) before your surrender charges expire.

Malpractice Target

Other suitable annuity investors: potential targets of lawsuits. Assets in life insurance policies and annuities are credit protected in many states. As long as the money wasn't put there in defraud of creditors, it's safe from malpractice suits. Anyone in the personal services business today who's likely to be sued -- doctors, lawyers, CPAs, architects, financial planners -- might want to take a second look at these products.

Whole Life Loser

If you own an underwater universal life insurance policy, you may want to transfer the assets to an annuity. Typically, life insurance losses are not tax deductible. But if you move the money into an annuity, the losses can be used to offset the annuity's gains.