Individuals can purchase a variable annuity from an insurance company as an investment that provides regular payments either immediately or at a future date. Many Americans choose variable annuities as retirement and investment plans. However, before you purchase one, it is important to know the facts. As a qualified variable annuity life insurance company, AnunuityQuickQuote.com can help you decide if a variable annuity is the right type of investment plan for your specific needs.
While a fixed annuity offers consistent returns, a variable annuity offers fluctuating returns that depend on the performance of the investment. Similar to the way that equity-indexed annuities fluctuate because they calculate interest based on changes in the index, variable annuities fluctuate with a measure or an index. The index may be the lender’s cost of funds or current money market rates.
Designed to be a long-term investment, the first phase of a variable annuity is called the accumulation phase. During this phase, you make purchase payments and decide where to invest your money. A variable annuity has many different investment options. Usually, the options are mutual funds that invest in bonds, stocks, money market instruments, or a combination of all three.
Even though a variable annuity may be invested in mutual funds, they are very different from mutual funds in three main ways:
- You receive periodic payments for the rest of your life. You can choose to receive variable immediate annuity payments, or payments starting at a future date. Either way, a variable annuity gives you the opportunity to receive payments without outliving your assets.
- You have a death benefit in case you die before you receive your payments. In the event that you die, your beneficiary will receive a specific amount.
- Variable annuities are tax-deferred. You don’t have to pay taxes on the income and investment increase while your money in still in the investment. Plus, while you transfer your funds from one option to another.
AnnuityQuickQuote.com has the knowledge and expertise to help you choose the best possible plan for your specific needs. If you are not sure whether you need a variable annuity or a fixed annuity plan, please contact us today. We are available to answer any questions you may have-and provide you with a plan towards a wonderful retirement.