7 Utmost Features Of Variable Annuities That You Must Know


A variable annuity offers various investment opportunity, uses mutual funds, provides a stable income, and requires the annuitant to pay certain fees, has two phases and is tax-deferred are some essential characteristics of a variable annuity.

An annuity is an investment made by an annuitant. The annuitant will receive funds once, twice, or four times a year. Retirement programs integrated with insurance products are termed annuities. It helps the annuitant or his or her recipient receive stable income when the annuitant stops working. Annuity Leads aid in matching investors to the right type of annuity. If you are interested in investing in an annuity, a variable type of annuity might be what you’re looking for. Here are some things you should understand first about Annuity Leads.

This is the sort of contract that is purchased by an annuitant

A variable annuity, like other annuity types, is a two party agreement made between the insurer, which is the insurance company, and the investor, who is the annuitant. The annuity holder has the option to buy the varying annuity contract either by way of tendering entire payment in one go or paying the same in a number of installments.

It gives different investment options

Variable annuity investors are offered a variety of investment options that they can choose from. These may include bonds, stocks, money market vehicles or an assortment of these three.

It uses mutual funds

Typically, mutual funds are used in variable annuities for investing in bonds, stocks and money markets. Much like typical mutual funds where no value is guaranteed is how the investment process works. The investment values will correspond to the performance of the annuitant’s chosen investments, similar to traditional mutual funds. However, switching one fund to another shall not incur any costs or sales charges for the investor, unlike ordinary mutual funds.

A stable income is provided by this

Like any annuity product, variable annuities give the annuitant the opportunity to have a stable source of income over a particular period of time. The annuitant may receive the money from the insurer right away or at a later time depending upon the details of the contract. The annuitant can also decide whether to receive the returns in lump sum or in a payment stream made at regular intervals.

The annuitant is expected to pay certain fees, predefined

There are some fees that have to be paid while purchasing the variable annuities, as well as charges for the mutual fund investments. Usually, these charges include surrender fees, expense risk charges, fees for administration, and underlying fund costs and special feature fees.

There are two stages

There are two phases through which the variable annuities go. The first phase wherein the purchase payments are made and allocated subsequently to the annuitant’s choice of investments is the accumulation phase. The second period is called the payout period. This is where the purchase payments made are returned to the investor together with any earnings that have been gained from the investment options.

It is tax-deferred

One important characteristic of a variable annuity is that it is tax-deferred. In other words, the investor’s income and gains from the different investments will not be taxed until the money is withdrawn or taken out of the variable annuity.

The outcome of variable annuities will depend on the annuitant’s decisions and objectives at the end, similar to any other investment.

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