Variable Annuities

Variable annuities have become a part of the retirement and investment plans of many folks round the globe. Before you buy a variable annuity, you should know some of the basics – and be prepared to ask your insurance agent, broker, financial planner, or other financial professional lots of questions about whether a variable annuity is right for you.

A variable annuity is a contract between you and an insurance company, under which the insurer agrees to make periodic payments to you, beginning either immediately or at some future date. You purchase a variable annuity contract by making either a single purchase payment or a series of purchase payments.

A variable annuity offers a range of investment options. The value of your investment as a variable annuity owner will vary depending on the performance of the investment options you choose. The investment options for a variable annuity are typically mutual funds that invest in stocks, bonds, money market instruments, or some combination of the three.

A variable annuity has the following costs:

• Mortality and Expense charges
• Administration charges
• Underlying investment charges
• Rider charges (if you select any optional riders)

Depending on the features of the annuity you’re looking at, these charges will vary. A basic annuity will have lower fees and expenses, and a fully loaded variable annuity with every possible option will be expensive.