Definition of Variable annuity:
A variable annuity is a type of annuity contract, the value of which can vary based on the performance of an underlying portfolio of mutual funds. Variable annuities differ from fixed annuities, which provide a specific and guaranteed return.
There are two elements that contribute to the value of a variable annuity: the principal, which is the amount of money you pay into the annuity, and the returns that your annuity’s underlying investments deliver on that principal over the course of time.
Annuity in which the amount of periodic payment varies according to the income generated by the assets in an investment portfolio. Variable annuities are used generally as inflation hedge.
How to use Variable annuity in a sentence?
- Fixed annuities, on the other hand, provide a guaranteed return.
- Variable annuities offer the possibility of higher returns and greater income than fixed annuities, but there’s also a risk that the account will fall in value.
- The value of a variable annuity is based on the performance of an underlying portfolio of mutual funds selected by the annuity owner.
Meaning of Variable annuity & Variable annuity Definition