Prompted by increased competition among insurers peddling variable annuities through banks, Nationwide Insurance has unveiled a price cut set to debut next month.

The company, which sells insurance products through 160 banks, hopes to juice up sales of America's Future Annuity by charging 30 basis points less than the competition on the value of an account for the insurance component of the product. The industry average is 125 basis points.

"We just feel this is a good time to come to market and make sure we deliver a consumer-value product," said Gari Aber, vice president of business development at Nationwide Financial Institution Distributors Agency Inc.

Columbus, Ohio-based Nationwide sold $721 million worth of variable annuities to bank customers last year and reached a volume of $524.5 million through June 30 this year.

Nationwide is joined by several insurance companies primping their variable annuities products to get an edge in the marketplace.

Some tout annuities that employ several money managers, but the industry leader, The Hartford, which had a 45% share of the total $6.6 billion worth of variable annuities sold through banks last year, sticks with single- investment-manager products.

The combined cost for insurance and the mutual fund fees for both of its variable annuities, Hartford Direct and Putnam Capital Manager, is about 185 basis points, according to a Hartford spokesman.

"This is becoming a tensely competitive area," said David G. Kaytes, managing vice president of First Manhattan Consulting Group. "The Hartford is way ahead of everybody in this area, having gotten started a long time ago."

Mr. Kaytes, who consults with bankers on their insurance sales programs, added that variable annuities are becoming a fee income bandwagon. "It is pretty widely recognized it's a serious wave to ride, maybe even on the order of the mutual fund wave a decade ago. The players already there have that extra boost," Mr. Kaytes said.

Keyport Life Insurance Co., which sells annuities through 60 financial institutions, including 35 banks, may introduce a variable annuity with an index fund manager next year. Other considerations the insurance company has for its next generation of variable annuities are guaranteed minimum payouts and flexible contributions.

Late last year, Keyport rolled out a variable annuity, dubbed Advisor, that invests with several money managers to replace its proprietary Preferred Advisor product. Sales of both reached $98 million last year, but Keyport Advisor alone has sold $120 million through September this year. The company has budgeted for $200 million to $250 million of sales next year.

Though a fear was raised this summer that the new tax law would adversely affect the tax-deferred attributes of variable annuities, the industry's leading trade group is trying to debunk this concern.

"We found the variable annuity was an attractive product before the tax law and it remains an attractive one afterward," said Mark J. Mackey, president of the National Association of Variable Annuities.

A Price Waterhouse study released by the association last week said the break-even point-the number of years of accumulation at which the after-tax return from a variable annuity investment equals that of a comparable mutual fund investment-did not increase.

There was speculation that the break-even point could be raised to 10 years, but the study asserted that for the most part it would only be as high as one or two years.

Mr. Mackey said concern over the break-even point is misplaced, given that variable annuities are designed for long-term investing.

"After 10 years you will have significantly more money than a mutual fund, and by the time you hit 25 years, you'll be way ahead of game," he added.

The study found that an initial investment of $1,000 in a variable annuity would pay more than $24,000 more after taxes, with 25 years of accumulation and systematic withdrawal, than a mutual fund.

Yet some variable annuity salespeople say dwelling on tax-deferral advantages is a stale pitch anyway.

"It's more than just mutual funds in a tax-deferred wrapper. There is more going on here than that catch phrase," said Stephen B. Bonner, a senior vice president at Keyport who directs sales through financial institutions.

He added that, when targeting baby boomers and the over-50 crowd, a bigger marketing opportunity exists in going back to the actual purpose of investing in an annuity: fixed income.

"The whole financial services marketplace is focused on accumulation," Mr. Bonner said, "but nobody has sat back and thought about what happens as people move from accumulation to the income phase."

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