How does a variable rate annuity differ from a fixed annuity?

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13 Mar

I was advised that a fixed rate was a better option. Is that true, and why?

2 Comments

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Kevin R

March 13, 2010 at 10:31 am

The differences between annuities are in a variable your money is at financial risk in the stock market and returns are not fixed. In a fixed product you get a specific distribution at a specific time, based on the full faith and credit of the insurance company. Personally I hate all insurance products, because I’m a better investor.

One better than the other? Depends more on you and your financial situation, and risk tolerance. Neither product is guaranteed, but may work for you from a tax standpoint.
Susan C

March 13, 2010 at 11:04 am

The better investor who hates insurance products is incorrect. Variable are tied to the stock market and at risk with no guarantees on your principal. The fixed is guaranteed in every state some up to $500k per account depending on the state you reside by the National Guarantee Association. Fixed is wonderful if you are looking for safety and tax deferred growth. Hope that clarified the facts

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