Fixed, Variable and Index annuities

The main difference between variable and fixed annuities is who assumes the investment risk. A fixed annuity earns interest at a rate guaranteed by the insurance company when you're saving for retirement and then guarantees payment of a specific dollar amount when you retire. With a variable annuity the return is tied to the performance of your underlying investments, so the investment risk is on the policyholder. You can invest in stock funds and historically equities do tend to fight inflation.


Insurance companies also offer an annuity with market linked gains and principal protection feature.
An indexed annuity offers purchasers market linked interest without the risks associates with Variable Annuities and has principal guarantee. 

This information is not intended as and should not be construed as investment, tax or legal advice.