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Variable annuities: market potential with some risk

Variable annuities can help you accumulate money for retirement and provide income after you retire. A variable annuity offers market growth potential based on the investment options you choose. It may be a good choice if you’re willing to tolerate market risk in exchange for growth potential.

Six reasons to consider a variable annuity (VA)

1

Diversify your portfolio

Variable annuities can help diversify1 your overall financial strategy by offering market participation with the opportunity for protection and income benefits (which may be built-in or available through an optional rider at an additional cost).
2

Participate in market gains

Allianz VAs can give you growth potential through a variety of investment options to help you accumulate for retirement. Allianz works with some of the industry’s most respected money managers to provide a broad range of investment choices.
3

Choose a level of protection

Allianz variable annuities offer a level of protection through an optional benefit that is available for an additional cost.
4

Grow tax-deferred

VAs are an insurance product that give you the opportunity to build a portion of your assets tax-deferred. This means you don’t have to pay taxes on any gains until you take money out of your annuity.
5

Get flexibility

Your financial needs and goals can change over time. That’s why VAs offer a variety of investment choices, plus options for receiving income. They also let you change your investment direction at little or no cost.
6

Leave a legacy

During the accumulation phase, VAs pay your loved ones a death benefit if you pass away before you start taking scheduled annuity payments. (And in most cases, the death benefit is not subject to probate.)

See how variable annuities work.

Variable annuities have two phases: the accumulation phase, during which your annuity can grow tax-deferred. 

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You buy a variable annuity.

An annuity is simply a contract between you and an insurance company. You pay the insurance company one or more purchase payments. In exchange, you get the benefits the insurance company guarantees through your variable annuity contract.
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You customize your investment.

Some VAs let you choose a number of variable investment options, depending on your risk tolerance and financial goals. Your contract’s value may increase – or decrease – depending on the performance of the variable investment options you choose. Variable annuities involve risk, and it’s possible to lose money.

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Your annuity grows tax-deferred.

You don’t have to pay taxes on the gains your contract earns until you take money out of your annuity. This tax deferral can help the money in your annuity accumulate faster.

The second phase begins when you start taking income. We call this the distribution phase.

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Your annuity provides income.

After a period of time specified by your contract, you may then receive the amount allowed by your VA contract in a lump sum, over a set period of time, or as lifetime income through annuitization. Some variable annuities even provide the opportunity for increasing income through optional income riders (available at an additional cost).

Is an Allianz variable annuity right for you?

Your financial professional can help you decide whether one of these may be appropriate for your unique needs (product availability may vary by broker/dealer):

Allianz Vision℠ Variable Annuity

Seeking growth potential, plus lifetime income? 
A variety of investment options give you the potential for long-term growth – and your contract’s Benefit Base also gets a simple-interest credit each year, even if the market doesn’t do well. Then, add the optional Income Protector rider (available at additional cost) to build a foundation for guaranteed lifetime income, with the potential for your income to increase each year before your 91st birthday.
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Allianz Connections℠ Variable Annuity

Do you want potential growth, plus income for life?
Get the potential for long-term growth with a variety of investment options. Your contract’s Benefit Base also gets a simple-interest credit each year, even if the market doesn’t do well. When you add the optional Income Protector rider (available at additional cost) you can also get guaranteed lifetime income, plus the potential for your income to increase each year before your 91st birthday.
allianz connections variable annuity
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Frequently asked questions

What are the pros and cons of variable annuities?

Variable annuities offer unique benefits, but they do have fees – and exposure to market risk. On the pro side, variable annuities generally don’t limit how much money you can place in the contract, and they offer tax-deferred growth potential. VAs also give you access to a variety of managed funds you may not be able to invest in elsewhere. Plus, they offer a death benefit before you annuitize the contract, along with a variety of living benefit and income rider options (available at extra cost). But one of the important cons to consider is the risk of losing money due to market downturns. Variable annuities also have contract fees and charges, including fund subaccount management fees. Plus, most variable annuities have a deferral period. If you take money out sooner than the specified period (usually between three and 10 years), you could incur a surrender charge. Also, withdrawals before the annuity owner turns 59½ will incur a 10% federal additional tax. Variable annuities are complex financial instruments, which is why Allianz offers them only through financial professionals. Your financial professional can help you determine whether a variable annuity makes sense for your unique situation.

What is a variable investment option?

Variable annuities offer a range of variable investment options in which you can invest your principal. VAs allow you to choose from a variety of managed and unmanaged investment options, so you can select a performance-and-risk ratio that is appropriate for your long-term financial goals. Allianz has teamed up with some of the industry’s most respected money managers to offer a broad range of investment choices.

What is a rider?

Some insurance products (such as annuities) offer additional benefits through a rider, sometimes at extra cost. For example, variable annuities may include protection riders that reduce your principal’s exposure to market risk. Many annuities also offer income riders that offer more income options – and in some cases even the opportunity for increasing income. There are some riders you can add only when you purchase your annuity, and the cost of riders can vary. That’s why it’s important to understand your needs and explore all of your options with a financial professional before you buy an annuity.

Do variable annuities make you take RMDs at age 70½?

You shouldn’t have required minimum distributions (RMDs) if your annuity is held outside a retirement account. However, if you purchase a variable annuity within an Individual Retirement Account (IRA), you’ll have to take RMDs beginning at age 70½. You should also be aware that some annuity contracts require you to start distributions at a certain age (generally between 85 and 100) – so it’s important to ensure that the contract meets your long-term goals. A tax advisor can help you understand the tax implications of buying a variable annuity.

What is the difference between a variable annuity and a fixed index annuity?

Both offer similar benefits, but with different risk/reward profiles. Both variable and fixed index annuities offer the potential for tax-deferred growth and a death benefit. But variable annuities give you greater potential for gains in exchange for greater exposure to market risk. Fixed index annuities are designed to protect the money (principal) you place in your annuity contract, but place limits on how much your contract earns. In other words, variable annuities generally seek potential, while fixed index annuities generally focus on protection.

Explore other Allianz annuity options.

Fixed index annuities 
A fixed index annuity may be a good choice if you want the opportunity to earn indexed interest, but don’t want to risk losing money in the market.
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Index variable annuities
An index variable annuity may be a good choice if you’re willing to take on some market risk with the opportunity to grow your assets with a level of protection.
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1 Diversification does not guarantee a profit or protection against a loss.

A variable annuity isn't an appropriate solution for everyone, and you shouldn't buy one unless it’s appropriate for your situation. Purchasing an annuity is an important decision, and one you should only make after consulting with your financial professional and tax advisor.

Check the background of Allianz Life Financial Services, LLC on FINRA's BrokerCheck.


Investing in a variable annuity may be the answer for part of your overall retirement strategy. A variable annuity offers a unique combination of features, including market participation through a variety of investment options; tax-deferred growth opportunities; and optional protection benefits that can provide certain accumulation, income, and beneficiary guarantees for an additional cost. Please note that we no longer offer any variable life insurance products.

Variable annuities are subject to investment risk, including loss of principal, and contract values fluctuate daily. Investment returns and principal value will fluctuate with market conditions so that units, upon distribution, may be worth more or less than the original cost.

Purchasing an annuity within a retirement plan that provides tax deferral under sections of the Internal Revenue Code results in no additional tax benefit. An annuity should be used to fund a qualified plan based upon the annuity’s features other than tax deferral. All annuity features, risks, limitations, and costs should be considered prior to purchasing an annuity within a tax-qualified retirement plan.

Withdrawals will reduce the contract value and the value of any protection benefits. Withdrawals taken within the contract withdrawal charge schedule will be subject to a withdrawal charge. All withdrawals are subject to ordinary income tax and, if taken prior to age 59½, may be subject to a 10% federal additional tax.

For more complete information about variable annuities and variable investment options, call your financial professional or Allianz Life Financial Services, LLC at 800.624.0197 for a prospectus. The prospectuses contain details on investment objectives, risks, fees, and expenses, as well as other information about the variable annuity and variable investment options, which you should carefully consider. Please read the prospectuses thoroughly before sending money.

Guarantees are backed by the financial strength and claims-paying ability of the issuing company. Variable annuity guarantees do not apply to the performance of the variable subaccounts, which will fluctuate with market conditions.

• Not FDIC insured • May lose value • No bank or credit union guarantee • Not a deposit • Not insured by any federal government agency or NCUA/NCUSIF

Products are issued by Allianz Life Insurance Company of North America, 5701 Golden Hills Drive, Minneapolis, MN 55416-1297. Variable products are distributed by its affiliate, Allianz Life Financial Services, LLC, member FINRA, 5701 Golden Hills Drive, Minneapolis, MN 55416-1297. (L40538, L40538-NF)

Product and feature availability may vary by state and broker/dealer.