Define Variable Annuity

Variable annuities are complex products with many features that you need to understand clearly so you can use them correctly.

Define variable annuity. Variable annuities convert lower capital gains rates on taxable income if the. A variable annuity is a contract sold by an insurance company that guarantees future payments to the holder based on the performance of the underlying securities listed in the contract. The Prudential Defined Income Variable Annuity is a long-term retirement investment with a built-in guaranteed lifetime withdrawal benefit that tells you exactly what your lifetime income will be whether you begin taking income immediately or at some point in the future.

Fixed and variable refers to the size of payments you receive from the annuity company. The contract provides the holder with future payments based on the performance of the contracts underlying securities. Variable annuities are one of the most oversold products in the financial services industry.

A variable annuity is a contract with an insurance company that includes investments you choose and a fixed insurance component. Although they have been around for a long time variable annuity plans are not common. Money deposited in a variable annuity grows on a tax-deferred basis so that taxes on investment gains are not due until a withdrawal is made.

What Is A Variable Annuity. A variable annuity. It serves as an investment account that may grow on a tax-deferred basis and includes certain insurance features such as the ability to turn your account into a stream of periodic payments.

This refers to when the insurer begins paying you money. These products can accomplish many different investment objectives for many types of investors from conservative to aggressive. You invest the funds in your variable annuity in one or more funds most of which are mutual funds that focus on specific areas of the market.

Especially for people that are in the Accumulating Wealth Phase of their life these investment vehicles. Variable annuities earn returns based on the investment portfolios performance stocks bonds mutual funds also known as a subaccount. You purchase a variable annuity contract by making either a single purchase payment or a series of purchase payments.