You can’t discover what is annuity without knowing about its types and categories. Annuity can only pay you when you know a lot about how it works and how to go about getting the right type. Variable annuity is one of the basic types of annuity you can benefit from. You need to know what it stands for before thinking of investing your money.
Simply put, Variable annuity is a kind of annuity that gives you the room to choose from diverse investment options such as stocks, bonds and mutual funds. You invest your money through an insurance company that offers the annuity. In return, the insurance company pays you regular income depending on the performance of your investments. In most cases, you’ll gain a lot if the investments are doing very fine. On the other hand, you’ll also lose if the investments are declining.
There are benefits you’ll gain when you go for variable annuity. You can control the profit or loss by being wise in your investment process. You need to diversify your investments into various offers. This will protect you from losing all when one of the investments begins to decline. If you only invest everything in one option, you may end up losing your money if the investment continues to decline.
Variable annuity is tax-deferred. This means that, you won’t pay any tax from the income until you’re set to make withdrawals. This can help you save a lot of cash in the process.
Variable annuity can easily build up your savings by giving you the room to enjoy long-term capital growth. You can begin by investing any amount of money in stock or mutual funds. You simply sit down to watch the investment grow in leaps and bounds. During the period of growth, no tax is deducted from your income until you’re set to make withdrawals. You’ll also gain from a variable annuity since it’s not affected by inflation. You’ll always enjoy all other benefits as well.
Meanwhile, there are some dark sides of variable annuity. When studying about what is annuity, you need to consider the pros and the cons of any type of annuity you’re studying. Variable annuity is not all that good for a beginner. This is because, there are risks involved in it. There’s the risk of market fall. This can cause you hypertension if you’re not conversant with the economic market
It’s always very good to be well informed when seeking for information concerning what is annuity and its types. You don’t need to jump into conclusions. There are several insurance companies offering variable annuity and every other type of annuity in the US. You have to take some time to look into their offers. You also need to consider the charges involved. Some insurance companies also have hidden charges also. You need to make proper inquiries before picking any of them. There’s the need to be properly guided by a financial adviser or an insurance agent. This saves you from lots of problems.