A variable annuity is a contract between an individual and an insurance company in which the latter consents to make periodic payments to the individual, either immediately or in the future. The individual makes a one-time or series of purchase payments to acquire the annuity.

Variable annuities go through two phases: an accumulation and payout phase. During accumulation, the individual makes purchase payments that are allocated to various investment options (as specified by the individual). At payout, the individual may choose to receive purchase payments as well as investment income and gains all at once or through a stream of payments. Before deciding if a variable annuity is right for you or your employees, consider the following variable annuity list of benefits:

1. An individual will receive periodic payments for the entirety of their life, ensuring the individual does not outlive their assets.

2. If an individual dies before the payout phase, their beneficiary is guaranteed to receive a specified amount.

3. An individual pays no taxes on income and investment gains from their annuity until money is withdrawn.

Action Steps
The best contacts and resources to help you get it done

Understand how a variable annuity will fit into your life and financial goals

Before making any long-term financial decisions, make sure you have a grasp of all the additional fees and taxes that may apply with your desired variable annuity. It is important to consider whether or not such an annuity fits into your retirement and financial needs, as they are intended to be long-term investments and not for short-term gains. There are a variety of free tools to aid you in your annuity decision-making online.

I recommend: Take a look at the Life Insurance and Annuity Tax Tool at Insure.com to ensure you are aware of all your annuity's tax consequences. AnnuityIQ.com may also prove beneficial, as it provides a financial calculator to determine how specific annuities will fit into your retirement plan.

Ask a financial professional for advice and variable annuity information before making any purchases

Seeking financial advice from an expert is advantageous, as variable annuities have many investment and payout options. Understanding all the specifics of the annuity you are purchasing and how it will fit your financial needs is crucial to making your investment successful in the long-term. Even if you are familiar with the financial industry, having someone double-check your options and benefits is not a bad idea.

I recommend: Whether you are curious about purchasing a variable annuity or already own one, AnnuityFYI connects individuals with qualified financial advisors and licensed agents either online or over the phone. You might also be interested in checking out Jefferson National Life Insurance Company, as they match individuals with financial advisors in their area to help match goals with investments.

Locate a variable annuity provider online when you are ready to purchase

Find variable annuity providers online that make purchasing simple and easy. Many insurance companies sell different variable annuities that can be tailored to individual financial needs or employee packages. Be sure to understand all your options before making a final purchase.

I recommend: Take a look at the range of variable annuities available for employers at AXA Equitable Life Insurance Company. Consider buying from Pacific Life, which provides individuals with prospectuses and additional information about variable annuities for purchase.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  Before allocating purchase payments, request a prospectus from your insurance company, as it is the most important source of information about a variable annuity's investment options.
• •  Before allocating purchase payments, request a prospectus from your insurance company, as it is the most important source of information about a variable annuity's investment options.