What is a Variable Annuity? 4 Key Details You Should Know
If you're thinking of annuities as a retirement plan option, or are just curious about them, you'll want to continue reading. Below, we'll explain what a variable annuity is, how it works, and four key details you should know. By the end, you should better understand annuities and whether they're the right retirement planning choice for you. So read on!
How does a variable annuity work?
A variable annuity contract is a form of insurance connected to a corresponding investment account. Over time, you can make regular contributions and "annuitize" the contract when you need a steady income. Variable annuities serve as a type of retirement plan that allows you to invest your money in several different ways. This can include buying and holding stocks, mutual funds, ETFs, or bonds. In addition, variable annuities are often recommended for people wanting to enjoy tax-deferred growth after other tax-advantaged options have been exhausted.
What are the key features of a variable annuity?
A key feature of variable annuity products is the ability for investors to switch their investments. Stocks, bonds, and other assets can be bought or sold without penalty or withdrawal fees (as long as they remain inside the annuity contract). This means you can take advantage of market opportunities without worrying about surrender fees or lock-in periods. In addition, variable annuities can be customized according to an investor's risk tolerance and investment goals. A variable annuity may be the right choice if you're looking for long-term stability or are interested in taking risks.
What risks are associated with variable annuities?
Variable annuities are a type of annuity that offers the potential to make lots of money over time. Still, there are also risks associated with the product. Here are some of the most common ones:
Possible loss of principal invested: Due to investment risk, variable annuities cannot guarantee your principal. Nor are variable annuities backed by any government entity such as the FDIC.
Commissions and fees: Every variable annuity contract comes with its own contractual language. Those with high commission and operating fees can undermine the growth potential of your investment.
Is it worth investing in a variable annuity?
Variable annuities are not suitable for everyone. If you're unsure whether this product is right for you, then it's best to speak with a professional. Before investing in a variable annuity, make sure you fully understand the contract, fees, and charges associated with it, as well as the benefits and drawbacks of the annuity type you've chosen. Before purchasing, you need to know how it works (withdrawals, surrender charges, death benefits), fees and commissions, survivorship rights, and surrender charges. Contact my office today to learn if a variable annuity might be right for you.
- Long-term Health Benefits of Physical Activity
- How to Trim Down Hidden Costs of Flying
- Best foods for hydration
- How to Experience Positive Aging (8 Tips)
- How to Improve Your Health: The 5 Main Aspects of Wellness
- How much should you actually have in savings?
- Are you underinsured for your circumstances?
- How to Build Sustainable Wealth
- How to Maintain Our Body
- Enhancing Resilience as We Age
- The Body After 60: Overcoming Barriers to Exercise
- The best herbs to grow for beginners
- Foods you had no idea you could freeze
- Is celebrating your 100th birthday no longer a dream?
- Medicare and Medicaid: Dual eligibility
- Summer Workouts for Your Dose of Vitamin D
- What’s Keeping You from Losing Weight?
- Music and Your Wellbeing
- Your NEW Social Security Statement
- How to Dispose of Unused Medications
- Smart Home Systems: Promoting a Comfortable Environment for Seniors
- Aging and Our Body’s Ability to Heal Itself
- Keeping Health Insurance After a Layoff
- Waking Up to the Impact of Insomnia
- How Life Insurance Benefits Women
- What experts say about raising the retirement age
- Coverage for healthcare treatment denied? Here's what you can do.
- Sharing the Road with Cyclists
- Buying Life Insurance for an Elderly Parent?
- Living Your Best Life After 60
- Buying Health Insurance: A Millennial’s Guide
- Self-Love Ideas for Valentine’s Day
- Life Without Clutter
- Set Yourself Up for Success with Your Fitness Routine
- Winter Hydration – Do I Need It?
- I’m 60+; Do I Need Life Insurance?
- Why Do I Keep Breaking My New Year's Resolutions?
- Closing Out the Year with a Smile!
- How to Enjoy a Long Layover
- 6 Cold Weather Safety Tips
- 10 Tips for Managing Cholesterol Levels
- How Much Life Insurance Do You Need Right Now?
- 3 Top Tips for Better Posture
- Building Bone Density for Seniors
- Living Outside Your Comfort Zone in Retirement
- 3 Top Habits that Lead to a Happy Life After Retirement
- Should You Insure Your Gifts?
- Everything You Need to Know When Retiring Under 65
- 7 Benefits of Slow Travel
- Utilizing Medicare Preventative Services
- The Harsh Reality of Credit Card Fees
- Keeping Your Health Insurance Affordable
- 7 Tips to Weather Challenging Periods in Your Life
- What is a Variable Annuity? 4 Key Details You Should Know
- 4 of the Best Ways to Stay Healthy this Summer
- How to Prevent Sun Damage to Your Eyes
- 3 Tips for Safer Grilling
- When the Sun is NOT Your Friend (What You Need to Know about Sun Exposure)
- Tips to Avoid Stress Eating
- Affordable Care Act Open Enrollment – Important Dates and What’s New
- Medicare’s Open Enrollment Period is Here!
- How to Prepare for the 2019 Medicare Annual Enrollment Period
- Medicare: The Difference Between AEP and OEP
- Is Plan F (Medicare) Going Away?
- How to Choose a Primary Physician
- How to Store Your Life Insurance Records
- Prepare a Health Care Package for Your College Student
- 5 Portion Control Tips
- What Does MACRA Mean for You?