Wealth &
Protection Planning

Variable Annuities

A variable annuity is a contract with an insurance company.  Variable annuities are used to help fund or supplement the retirement income needs of investors.  Variable annuities offer the investor the ability to invest in a wide array of investment options called separate or variable accounts.  Fixed account options may also be available.  Variable accounts offer the investor the ability to invest in options from conservative to aggressive growth.  The value of the variable annuity will fluctuate depending on the performance of the investments in the underlying portfolios of each variable account.  Investors can usually change from one variable account to another without any charge.  Transfers among variable accounts are not subject to any current taxes.  The taxes due on any growth from the variable annuity are deferred until the money is withdrawn.  There may be withdrawal or surrender charges for early withdrawals and any withdrawals prior to age 59 1/2 may be subject to a 10% IRS tax penalty. 

Like mutual funds, variable annuities have annual administrative fees and fund management fees.  There is also a mortality and expense risk fee, which is charged to the variable accounts on an annual basis.  Unlike mutual funds, variable annuities offer the ability to withdraw money in lump sums, systematically, or the contract owner can choose to annuitize the contract to provide a guaranteed income for life and/or the life of his or her beneficiary.  The guarantee of a lifetime income is based on the continued claims paying ability of the issuing insurance company.  Investors interested in a variable annuity should obtain a prospectus from the insurance company and read it before making any investment decisions. 

Contact a STRIVE Wealth Advisor for more information about variable annuities. 

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