We’ve been asked what a variable annuity and a fixed annuity are. What are the differences between them? Essentially:
A variable annuity’s value is based on the performance of a portfolio of sub-accounts; it offers the opportunity for higher returns and greater income than a fixed annuity, but there’s also a risk that the account will fall in value if there’s a market downturn.
A fixed annuity, meanwhile, pays a specifically set, guaranteed interest rate on the account owner\’s contributions. While you are guaranteed to receive income from it, a fixed annuity’s rate of return may be disappointing in comparison to a variable annuity.
A fixed indexed annuity, unlike the previous two, can potentially offer you both safety (backed by the claims-paying ability of the carrier) and a reasonable rate of return over time. Interested in learning more? If you have any other questions about these products, give us a call. We’re always here to help.