Income Annuity Vs Variable Annuity
Its value can go up or down.
Income annuity vs variable annuity. Whether you are utilizing a variable fixed or fixed indexed annuity if the purpose is better growth your opportunity cost will be a better income benefit. A variable annuity fluctuates with the returns on the mutual funds it is invested in. How variable annuities work a variable annuity is part investment part insurance. Thus a fixed annuity is like a defined benefit pension plan such as social security while a variable annuity is like a defined contribution pension plan such as a 401k.
As such income payments may fluctuate over time. Variable annuities work similarly to. Not all fias and vas offer income riders but. The two primary deferred annuity product types that an income rider can be attached to are fixed index annuities fias and variable annuities vas.
Variable annuities were introduced in the 1950s as an alternative to fixed annuities which offer a guaranteed but often low return. Once funded an income annuity is annuitized immediately although the underlying income units may be in either fixed or variable investments. Variable annuities allow investors to stretch their accumulated earnings to last a lifetime. Fixed annuities pay the same amount each month while variable annuities pay an amount that depends on the investment performance of the investments held by the particular annuity.
A variable annuity is a type of annuity contract that pairs the growth potential of the stock market with the steady retirement income offered by annuities. An immediate annuity begins paying out as soon as the buyer makes a lump sum.