Wednesday, November 24, 2010

Retirement Benefits of Variable Annuities

Nowadays, almost all retirement plans and investment after retirement plans come with variable annuities for the retirees. Before you purchase a plan with variable annuity, make sure to know the fundamentals of variable annuity from insurance agents or brokers or other financial professionals. On the basis of the information from them, you can easily determine the suitability of variable annuity for you.

First of all, gather general information from all possible sources related to variable annuities, to say what annuity is, how it works, how it can benefit you financially and what the charges are associated with it. Ask the retirement plan provider for a prospectus on variable annuities. Go through the prospectus carefully. It may provide important information on investment options, annuity payout options, death benefits, and annuity fees and charges. Compare the facts and figures of the annuity of your chosen plan to several other variable annuities.

Variable annuity refers to a contract between an insurance provider and you. The contract is a sort of agreement between both of you. According to it, you will receive periodic payments from the insurer. Variable annuity comes with several different investment options. The value of the investment in a variable annuity varies depending on the profitability of the investment option that you have chosen.

Mutual funds are good investment options for variable annuity. Mutual funds invest in bonds, stocks and money market instruments. However, variable annuities are different from mutual funds in many ways. A variable annuity will benefit you with periodic payments till the last year of your life. It provides protection in sense that you do not need to outlive the assets after your retirement. Death benefit is one of the best advantages of a variable annuity. If your death occurs before you receive payments from the insurer, your beneficiary is sure to get the benefit.

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