
Types of Annuities: A Rundown
We’ve been asked what a variable annuity and a fixed annuity are. What are the differences between them? Essentially: A variable annuity’s value is based on the performance of a portfolio of sub-accounts; it offers the opportunity for higher returns and greater income than a fixed annuity, but there’s also a risk that the account will fall in value if there’s a market downturn. A fixed annuity, meanwhile, pays a specifically set, guaranteed interest rate on the account owner’s contributions. While you are guaranteed to receive income from it, a fixed annuity’s rate of return may be disappointing in comparison