Variable Annuity Basics
a variable annuity is an insurance product that is directly exposed to investments, often mutual funds. they can ? mutual fund with an insurance label. alan is looking for an investment that ? save money for retirement and defer his taxes until he reaches retirement age. moreover, he would like to have exposure to the stock market. alan decides on a variable annuity. alan's variable annuity has two phases, the accumulation phase and the payout phase. during the accumulation phase, alan makes payments into his annuity account. because it is a variable annuity, alan is able to divide his money into subaccounts. the funds in these accounts are then invested into mutual funds, stocks, bonds and money market accounts. ? alan reaches the retirement age, he enters the payout phase. the total payout that alan will receive is based on his total payments and the gains from the save accounts. because of the insurance portion of the annuity, alan will collect his predetermined monthly payment, even if his account is worth less than his original amount he deposited. variable annuities provide investors with the security of an annuity combined with potential returns from different investments. shopping around and comparing annuities offered by different companies will help you find the best annuity for your situation.
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