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What Are Variable Annuities?

Investing in variable annuities should only be done with great care. Our financial professionals can help you learn exactly about the risks involved with these annuities. Here are the basics.

VARIABLE ANNUITIES DEFINITION

An insurance contract in which, at the end of the accumulation stage, the insurance company guarantees a minimum income payment. During the accumulation phase the contract’s value fluctuates depending on the underlying investments selected, and it is possible to lose money. Any product guarantees are backed by the financial strength and claims-paying ability of the issuing insurer and do not apply to the performance of the variable subaccounts, which will fluctuate with market conditions.

WHAT IS A VARIABLE ANNUITY?

It won’t be a surprise that there is a lot of uncertainty involved with variable annuities. There are some basics similarities between variable annuities and other annuities. These include the option between regular payments or a lump sum and tax-deferred growth. But there are some differences, too.

One difference is the death benefit. If you die before the insurer has begun making payments to you, your beneficiary is guaranteed to receive a specified amount.  Variable annuities also combine features of tax-deferred retirement savings plans, mutual funds, and life insurance.

DISADVANTAGES OF VARIABLE ANNUITIES

We generally don’t recommend variable annuities for our portfolios. The main reasons are high fees and uncertainty, which are both defeating the purpose of an annuity. Talk to our financial advisors for recommendations on the best annuities for your personal situation and goals.

ADVANTAGES OF VARIABLE ANNUITIES

  • Participation in the growth potential of the stock market
  • Tax advantages, including tax deferral
  • Flexible income options
  • Beneficiary protection
  • Turn your assets into income you’ll never outlive