Variable Annuity

Do you consider yourself a more aggressive investor? If so, then a variable annuity might suit you just fine. Variable annuities are designed for people willing to take more risk with their money in exchange for greater growth potential. While there is more risk associated with a variable annuity, many variable annuities offer guarantees of principal and downside protection at an additional cost (depending on contract rider availability). However, these guarantees do not apply to the investment performance or safety of amounts held in the variable investment options. Some of the aspects of a variable annuity include Tax-deferred Growth Potential, the Opportunity for Market Appreciation, Benefits to Beneficiaries, and Benefits to Spouses.

Variable annuity contracts have limitations, will fluctuate in value and, unlike equity-indexed and fixed annuities, are subject to market risk, including the possibility of loss of principal. Variable annuities generally impose withdrawal charges based on the withdrawal charge schedule. A combination of withdrawals and market declines could reduce a variable annuity’s account value to zero, in which case the contract would terminate.

Often age is a major determining factor when considering a variable annuity. If you are young, for example 45 or younger, you have time to see the market through ups and downs. However, as we age, and have less time, a more conservative approach often makes a more logical strategy.