Variable Annuity

Variable Annuity

A variable annuity derives its cash flows from an investment portfolio so cash flows will rise and fall with the value of the investments made by the annuity provider. Variable annuity cash flows are not guaranteed. People are attracted to these products because returns may be higher than fixed annuities; others dislike them because of the downside risk: if the selected investment portfolio performs badly, annuity holders may not generate any return.

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