MetLife Inc. and Fidelity Investments have teamed up to producea new deferred variable annuity that provides a principalprotection guarantee.

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The new VA, the MetLife Accumulation Annuity, provides investorsboth growth potential and protection against loss if held for aminimum of 10 years, according to the companies. The principalprotection guarantee is backed by MetLife and, of course, carrieswith it specific terms, exclusions and limitations.

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The guarantee is aimed at getting annuity owners to find andthen stick to the appropriate asset allocation without worryingthat they will lose their principal — something that's all tooeasily done, particularly in a volatile market, when investors areeither afraid to stick with their choices or try to time themarket, doing neither very successfully.

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In fact, Dalbar's 20th Annual Quantitative Analysis of InvestorBehavior Study indicates that the average investor underperformsthe market. In addition, fear of losing principal can makeinvestors look for “safe” conservative holdings. Unfortunately,that means that they will likely fail to accumulate enough moneyeven to keep up with inflation.

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And that's where the guarantee kicks in, through thepreservation and growth rider — which is available at an extracharge. It allows investors to seek growth without losing theirbasic investment.

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According to the company, “The product invests in a diversifiedportfolio, offering investors the potential to benefit from marketgrowth, while at the same time providing protection for investorsagainst down market cycles.”

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The PGR guarantees the investor the return of his initialinvestment, adjusted proportionally for any withdrawals, at the endof a 10-year period. Withdrawals before the end of the 10 years maycarry a 2 percent withdrawal charge.

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Also, on every contract anniversary, investors have theopportunity to reset the guaranteed amount to a new, higher amountif the account value has increased. That extends the 10-year periodfrom that date. It may also increase the cost of the PGR.

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