A variable annuity is a contract between an investor and an insurance company that offers the potential for greater returns than traditional annuities.
What is a Variable Annuity?
A variable annuity is a type of annuity contract that provides a guaranteed income stream and tax-deferred growth. It also offers joint life payments, death benefit payments, and inflation protection.
What are the Benefits of a Variable Annuity?
The main benefits of a variable annuity are tax-deferred growth, a guaranteed income stream, joint life payments, death benefit payments, and inflation protection.
How Does Inflation Protection Work?
Inflation protection works by increasing the payments you receive from your annuity to offset the effects of inflation. This is done by using a formula such as the following: Payment = Annuity Amount x Inflation Rate.
A variable annuity can be purchased by making a single payment or a series of payments, giving the buyer flexibility to choose which option suits their financial situation best.
Variable annuities are long-term investments, so it is important to understand the associated risks and rewards before committing to this type of investment.
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