Variable Annuities

Posted by admin in Uncategorized on 12 31st, 2009 | 2,585 responses

You need to understand the moving parts of the variable annuity to protect yourself from purchasing this popular product when its unnecessary. A variable annuity is, in many cases, an “uninsured” securities/insurance product that provides investment options, much like mutual funds, for long term investors, who want an extra way to save for retirement. Further, these investment options (sub-accounts) are packaged within a variable annuity on a tax-deferred basis.

An annuity is a long-term, tax-deferred investment designed for retirement that will fluctuate in value. It allows you to create a fixed or variable stream of income through a process called annuitization and also provides a variable rate of return based on the performance of the underlying investments. They are not intended to replace emergency funds or to fund short-term savings goal.You should also know that an annuity contains guarantees and protections that are subject to the issuing insurance company’s ability to pay for them. But these guarantees don’t apply to any variable accounts that are subject to investment risk, including possible loss of your principal.

An annuity is a contract between you and an insurance company and it’s sold by prospectus. While it may take some time, you should read these documents. They describe risk factors, fees and charges that may apply to you. variable annuities have fees and charges that include mortality and expense, administrative fees, contract fees, and the expense of the underlying investment options.

You can bail out, If you’re trapped in a poorly performing variable annuity
. You need to consider! a variable annuity gives you a rate of return that changes based on how the selected underlying investments options perform. With a variable annuity, you can invest in one product with multiple underlying investment options and direct money into variable sub-accounts investment options based on how much risk you want to take. Investing involves market risk and your investment return, principal value and periodic payments will fluctuate over time, and you could end up with more or less than the amount you invested.

Before purchasing a variable annuity, you should carefully consider the investment objectives, risks, charges and expenses of the annuity and its underlying investment options. I think it’s a good idea if you visit the annuityfyi.com site, They is devoted to educating investors and financial professionals about annuities

Variable Annuities

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