When you need
the most growth

What is a variable annuity?

With a variable annuity, the contract value fluctuates based on the ups and downs the market may experience. This is in contrast to a fixed annuity, which provides a guaranteed interest rate, regardless of what may happen in the market.

When you purchase a variable annuity, you can choose from a selection of investments called subaccounts, which include stocks, bonds and money markets. Your financial advisor can tell you more about how subaccounts work. You can also tailor your contract to meet more of your needs by optional riders at an additional cost.


When evaluating the purchase of a variable annuity, you should be aware that variable annuities are long-term investment vehicles designed for retirement purposes and will fluctuate in value; annuities have limitations; and, investing involves market risk, including possible loss of principal.

A variable annuity is a contract you buy from an insurance company. It's designed to help accumulate assets to provide income for retirement. It will fluctuate in value based on the performance of the underlying investment options. You should also know that all guarantees and protections of a variable annuity are subject to the claims-paying ability of the issuing insurance company. They don't apply to the investment performance or safety of the underlying investment options. Underlying subaccounts are only available as investment options in variable insurance contracts issued by life insurance companies. They are not offered directly to the general public.

You may be charged a penalty if you take your money out early, if you're not yet 59½ (additional 10% tax penalty), or both. Variable annuities have fees and charges that include mortality and expense, administrative fees, contract fees, and the expense of the underlying investment options.

Were you looking for something different?    FixedIndexed_Cicle_Icon Fixed indexed annuity    Immediate_Cicle_Icon Immediate Annuity   Fixed_Cicle_Icon Fixed Annuity

See how a variable annuity works

Variable annuities

What are the benefits?

Tax deferral
Its tax-deferred status allows you to benefit from compounded growth.

Investment choices
Unlike their fixed counterparts, variable annuities give you a chance for long-term capital growth through investment in subaccounts.

Choose from different levels of risks and potential growth. You can also, on some accounts, exchange between subaccounts without fees or tax consequences.

Lifetime income
Get income you can't outlive either through annuitization (at no additional cost) or through the use of an optional rider (available for an additional cost) that guarantees income for a single person or to also cover your spouse when a joint option is selected.

Beneficiary protection
You can pass assets to beneficiaries and avoid costly probate. Optional riders can also enhance what your beneficiaries may receive.

Spousal opportunities
Most variable annuities offer a spousal protection feature to the surviving spouse upon the death of a spouse.

Only certain carriers can offer this same benefit on IRA contracts.

What should you consider before purchasing?

Risk of decline
Like mutual funds, if the underlying investments chosen for the annuity decline, the annuity's contract value also declines.

Surrender schedules
It's best used for a long-term contract, as taking out money early can trigger charges.

Higher fees
Fees may be higher when compared with investments like mutual funds. However, higher fees support the guarantees offered by the product.


Annuities articles

Visit our library of annuities articles in the Learning Center.

Value of annuities

View and download our comprehensive guide.

Value of annuities (videos)

Browse our collection of annuity videos to learn more about their benefits.

Share Article