What is the difference between fixed and variable annuities?
There are two basic types of annuities: fixed or variable. In a fixed annuity, your cash value earns a fixed interest rate. Additionally, you are guaranteed a fixed payment when you begin to receive your annuity income. Guarantees are backed by the claims-paying ability of the issuing insurance company. Variable annuities provide a variable rate of return, which will fluctuate up and down depending on the performance of the investment portfolio you select. The principal value of a variable annuity will fluctuate as well. A variable annuity offers more growth potential and investment choices than a fixed annuity, but also carries more risk.
