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A variable annuity is a contract between you and an insurance company. You agree to make contributions (either all at once or over time), which are invested as you choose from the options offered by the company, typically a range of mutual funds. In return, the insurance company agrees to make payments back to you for a set amount of time, either starting immediately or at some defined point in the future. The amount of these payments is determined by how well your investments have performed. Annuity earnings are tax-deferred, which is why they are often used as part of a retirement plan. And if you die before you start receiving your payments, the company will pay your beneficiary a certain amount, usually at least the amount you've paid in. Click below on any of the links to get online Cheap Variable Annuity, Variable Annuity Life Insurance and other annuity quotes.
A variable annuity is a tax-deferred retirement vehicle that allows you to choose from a selection of investments, and then pays you a level of income in retirement that is determined by the performance of the investments you choose. Compare that to a fixed annuity, which provides a guaranteed payout. Unlike their fixed counterparts, variable annuities are designed to pump up your savings by giving you a chance for long-term capital growth. They do this by allowing you to invest in anything from half a dozen to 20 or so stock or bond mutual-fund-like portfolios called subaccounts. As with fixed annuities, gains escape taxation until withdrawal. Because of the growth potential, a variable annuity may be more likely than a fixed annuity to outpace inflation. If you've already maxed out your contribution to 401(k)s and IRAs - both of which provide tax deferral without annuities' extra layer of fees - then variables can be a way to boost your savings for retirement, although you'll probably first want to check out investments such as index funds and tax-managed funds, which can provide tax-advantaged returns at a lower cost. If you do decide to buy a variable annuity, you should limit yourself to one with low annual fees and forgo expensive options that dampen long-term growth potential. If you want more of a potential payout than a fixed annuity offers and are hoping to benefit from market returns and have control over your investments, you may want to consider a variable annuity.
Variable Annuity Update