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What is the difference between a “fixed” and a “variable” annuity?

April 26, 2017Annuity fixed

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What is the difference between a “fixed” and a “variable” annuity?

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A. A fixed annuity carries a defined rate of interest that is credited to the contract’s account value while the principal and interest rate are guaranteed by the insurer. The account value of a variable annuity can be invested in several investment options, usually stock or bond subaccounts. Variable annuities fluctuate in value based on the performance of the investments of the underlying subaccounts.