Definition Of Variable Annuity

A variable annuity is a contract with an insurance company that includes both a self-directed variable investment component and an insurance component.

Definition of variable annuity. This is because while fixed annuities pay interest similar to certificates of deposit variable annuities include participation in both the stock and bond markets. While a variable annuity earns returns through investment performance a fixed annuity grows via a specific interest rate that the insurance company presets. What Is a Variable Annuity Explained Definition Pros Cons Annuities are among the oldest investment options in fact they have centuries of history.

A variable annuity is a contract between you and an annuity provider usually an insurance company in which you purchase the ability to receive a stream of income for your life or a set period of time. The market can also dictate the quality of these fixed rates though. The contract provides the holder with future payments based on the performance of the contracts underlying securities.

It is structured to be a retirement annuity into which is integrated several additional features. Then by reference to a simplified product an analysis of customer outcomes pricing. Common terminology used in the variable annuity market is introduced.

What is a Variable Annuity. The definition of the term variable annuity. Variable annuities have two components.

When you purchase a variable annuity either with a lump sum or over time you allocate the premiums you pay among the various. Since returns may fluctuate payments may vary as well. Especially over the past century fixed income annuity contracts have gained popularity with conservative investors as a safe means of growing their money on a tax-deferred basis.

The principal and the return. The principal is the amount the policyholder pays into the annuity. Variable annuitization is one option that can be selected by the policyholder during the annuitization phase of a contract which is the phase in which the policyholder exchanges the accumulated.