Variable Annuity

When it comes to Variable Annuity, you definitely need to think twice or thrice or may be more number of times. With all the criticism gained by this form of investment, it becomes strictly necessary to know what is so bad about it. And, if there is nothing bad about it, then what are the benefits offered by it to the investor. In the nutshell, you must check all spare parts before driving the vehicle of variable annuity to avoid landing into potholes on the way.

What Is Variable Annuity

Variable annuity is a form of investment, which brings together the benefits of investing in mutual funds and insurance benefits offered by the company. As against fixed annuity, an investor is eligible of receiving periodic benefits and returns by investing in variable annuity. You may choose the Immediate Variable Annuity to start receiving immediate benefits or deferred variable annuity, if you want to enjoy returns on investment at a later stage.

Various Types Of Investment Options Offered

A variable annuity may help you to make investments in various options like mutual funds, bonds, stocks, and other specified investment options. The advantage here is that major risks associated with all or few of these options are filtered with the help of variable annuity features. Thus, a safe investment is assured by variable annuity investments.

Other Good Things About Variable Annuity

Variable annuity is associated with many other benefits, apart from low risk investment options:

  • First and foremost, it helps you to defer your tax deductions by offering tax-deferred investment option. Thus, you may shed away your worries of paying tax on regular basis.
  • The death benefits are offered by Variable Annuity, according to which the designated survivor of investor receives exact invested amount in case of sudden death of the investor.
  • Another advantage of variable annuity is that you may exchange your invested amount in different investment options within the wrapper of variable annuity.

Something Bad About Variable Annuity

If you see with a lens, some of the benefits of variable annuity may turn into drawbacks, apart from additional pitfalls waiting for you:

  • The deferred taxes keep on accumulating and contributing towards a huge amount at the end. Thus, you will have to enjoy your tax freedom, with a foreseen danger of accumulated tax amounts.
  • Death benefits offered by Variable Annuity demand for additional fees in the very beginning of investment. So, death benefits are offered with a loophole, which could not be filled.
  • Variable annuity option is one of the expensive investment options, as it is associated with a number of fees like surrender fees, early withdrawal penalty and others.

Keeping in view whatever has been discussed here, the final decision of investing in Variable Annuity must be taken with huge understanding. It is better to talk to an insurance company representative to find related information in detail.