Variable annuities offer market growth potential based on the investment options you choose. A variable annuity may be a good choice if you're willing to tolerate some market risk in exchange for growth potential.
Variable annuities can offer:
- Tax-deferred growth
- Variable investment options
- Income options, including income for life
- Death benefit options
- Other benefits that may help protect your retirement assets and income (available at an additional cost)
How do variable annuities work?
- You give the insurance company money in one or more payments.
- Some variable annuities let you choose from a number of variable investment options, while others offer a pre-determined mix of investments.
- During the accumulation phase, your contract's value may increase – or decrease – depending on the performance of the investments you choose. Variable annuities involve risk, and it's possible to lose money.
- You defer paying taxes on any gain in your contract until you receive money from the contract. Tax-deferred growth means the money stays in your contract and has potential to grow faster.
- After a period of time specified by your contract you may then receive the amount allowed by your contract in a lump sum, over a set period of time, or as income for the rest of your life. This is known as the distribution phase.