subject: Seven Important Characteristics Of Variable Annuities [print this page] Seven Important Characteristics Of Variable Annuities
Some essential characteristics of a variable annuity include the following: it is a contract that an annuitant purchases, it offers a variety of investment options, it uses mutual funds, it provides stable income, it requires the annuitant to pay certain fees, it has two phases, and it is tax-deferred. An annuitant can make a long term investment called an annuitant. The net income generated would be distributed to the annuity leads either once in a year, or twice in a year or even quarterly. Insurance companies offer annuities, which are typically integrated into retirement programs. When the annuitant stops working, it helps the annuitant or his or her recipient receive stable income. There are many types of annuities. One of which is called Annuity Leads which are helpful in matching an annuity investor and an annuity type. You should research a variable annuity, if you think an annuity would be a good investment option for you. But first, here are some things that you should understand about it. It is a contract that an annuitant purchases Like other annuity types, a variable annuity is an agreement made by two parties: the insurance company, who is the insurer, and the annuitant, who is the investor. A lump sum or installment payments are the two ways customers can pay for variable annuity contracts. It gives different investment options Variable annuities offer a number of options for the investor. These may consist of the following; bonds, stocks, money market vehicles or an assortment of these three. It uses mutual funds For investing in bonds, stocks and other money markets in variable annuities, mutual funds are used typically. The investment process works like traditional mutual funds where there is no guaranteed value. Just like traditional mutual funds, the investment values will correspond to the performance of the annuitant's chosen investments. However, switching one fund to another shall not incur any costs or sales charges for the investor, unlike ordinary mutual funds. You are assured of steady earnings Variable annuities facilitate the annuitant to benefit from a stable source of income spread over a particular period. This is in line with any other annuity product. The annuitant may obtain the payments from the insurer immediately or at a later date, depending on the contract stipulations. Funds from this annuity can be received by either one lump sum or in incremental monthly or yearly payments. It requires the annuitant to pay certain fees There are some fees that have to be paid while purchasing the variable annuities, as well as charges for the mutual fund investments. Typically, these fees include surrender charges, expense risk charges, administrative charges, underlying fund costs and fees for other special features. There are two stages There are two phases through which the variable annuities go. Only the purchase payments are made in First phase or the accumulation phase and later distributed to the investments chosen by the annuitant. The phase called payout is only the second phase. Together with the earnings that have been gained from the investment option, the purchase payments are returned to the investor in this case. You may delay paying your tax in this case Being tax-deferred is one important characteristic of a variable annuity. It means as long as the income and gains are in variable annuity account, they will not be taxed. Inevitably, the outcome of variable annuities will ultimately rely upon the decisions and objectives of the annuitant.
