Variable annuities could spell double trouble for brokers who eye fat commissions but ignore the rules in place for protecting investors.

Brokers can earn 7 percent or more in commissions on these insurance products, but when they sell them to consumers who aren't a good fit for them, they can face the wrath of regulators as well as investors who try to reclaim their money by filing securities arbitration cases.

At the Financial Industry Regulatory Authority, Wall Street's industry-funded watchdog, variable annuities follow stocks and mutual funds as the third most common source of complaints. They include one from an elderly investor who will be 102 before he can access the money he locked into his annuity.

Problems occur when brokers sell variable annuities without considering the client's time horizon for needing those funds, said Susan Axelrod, Finra’s head of regulatory operations.

So-called "annuity switching" is another concern. That happens when a broker encourages a client to trade in an older annuity to buy a different one, often at significant cost to the client and benefit to the broker. Some brokers also don't disclose fees for cashing in, or surrendering the annuity, Axelrod said.

Rich Rewards, Complex Contracts

An annuity is a type of insurance product that offers investors steady income payments, typically in exchange for a lump-sum investment. Payments can grow if financial markets do well because they are tied to an investment portfolio, usually consisting of mutual funds holding stocks and bonds.

Investors defer taxes on the income and gains until they withdraw their money, and typically the withdrawal period is deferred for several years while the value of the annuity builds up. Variable annuities are often sold to high-earning investors who already are making maximum contributions to their workplace retirement plans and want to invest more under similar tax structures.

Variable annuity sales in the U.S. totaled $142.8 billion last year, down a tad from $145 billion in 2012, according to the Insured Retirement Institute and Morningstar Inc.

Brokers are well rewarded for selling variable annuities, in part because of their high commissions and in part because those commissions don't typically fall as invested amounts rise, the way they do when money is put into mutual funds, for example.