Variable Annuity

In contrast to a fixed annuity, the key features of a variable annuity can fluctuate (they are “variable”) during the accumulation period and during the payout phase. Also in contrast to a fixed annuity, the variable annuity contract holder assumes much of the investment risk. With a variable annuity, the insurance company provides the contract holder with the ability to determine how his or her premiums are invested. One investment option is a variable account which typically consists of equity, bond or money market mutual funds. The other option is the general account of a variable annuity which provides a guaranteed return. The contract holder decides how much risk or variability they want to tolerate by allocating premium payments among the general and variable accounts. The amount of money accumulated and the amount of income during the payout phase are determined by the returns of these accounts. With a variable annuity: 1) the money can go in as a single premium payment or a series of payments; 2) the money is invested at a variable or non guaranteed rate; 3) payments are variable and can begin immediately or at some future date.

I am in my 30s -- is there any reason I would buy an annuity now? My advisor has suggested it.

Owners of Variable Annuities with Living Benefits Protected from Market Storm

Certain living benefit guarantees--particularly guaranteed minimum withdrawal benefits--embedded in variable annuities have provided owners with downside protection during the recent financial market turmoil. A popular variable annuity -- the one with guaranteed “living benefits” -- may be the riskiest product ever sold by the insurance industry. Risky to the health of the insurance carriers, that is. If you bought one of these annuities, you will collect your promised, fixed, minimum income...
Key Phrases: 

What type of risk is associated with annuities?

There are a number of risks associated with annuities, and these risks often depend on the type of

Key Phrases: 

What types of fees should an annuity investor expect to pay?

It depends upon whether it is a

Companies: 

How does one typically purchase annuity products?

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