variable annuity

Variable Annuity

An insurance contract in which, at the end of the accumulation stage, the insurance company guarantees a minimum payment. The remaining income payments can vary depending on the performance of the managed portfolio.

Notes:

The portfolio generally invests in equity securities and its performance determines the amount of this total payment.

See also: Annuity, Deferred Annuity, Fixed Annuity

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variable annuity

An annuity with payments to the annuitant that vary depending upon the investment success of a separate investment account underlying the annuity. Because the invested funds are primarily in common stock, this annuity offers greater potential rewards and greater attendant risks than annuities supported by fixed-income securities. Compare fixed annuity. See also hybrid annuity.