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Variable Annuities

Variable annuities are types of annuities whose value is linked to the performance of an investment portfolio. There are many different variations of your investment portfolio — it could have equities, bonds, or an alternative investment or combination. Payments from your annuity will grow or drop according to this portfolio. While variable annuities may provide higher returns than fixed annuities, they don’t guarantee a payout.   

Variable annuities can be complicated. The agents at Cornerstone Senior Advisors are here to provide clarity so you can determine if this product is right for you.

What Is a Variable Annuity?

A variable annuity is a contract where you buy the ability to get an income stream for a set time period or for your life. The money you pay is allotted to an investment portfolio. You may be able to choose a predetermined portfolio that coordinates with your risk tolerance, time limit, and investment goals. 

If the portfolio performs well, payments from the annuity can increase. If the portfolio loses money, payments can decrease.

How Do Variable Annuities Work?

When you buy a variable annuity, you’ll have many choices for investing the funds in your portfolio. The options may include money market funds, stock mutual funds, bond mutual funds, stable income value mutual funds, and other investments. 

There will be two phases with a deferred variable annuity. If you defer your annuity, you’ll start receiving income payments at a later time. If your variable annuity is organized also as an immediate annuity, there won’t be an accumulation phrase.  

Accumulation Phase

The value can increase during this phase. You make an initial deposit to buy the annuity. Then you may identify how you want to invest your funds. Your investment could be divided among the different sources of income (that we listed above). Over time, your funds will increase or decrease based on the performance of what you invested.   

Payout Phase

Also called the distribution phase, this is when you can receive your funds either as a lump-sum or as a flow of variable payments. You can specify how long the payments will last.

The Benefits of Variable Annuities

There are certain benefits and risks with any investment. Consider the benefits that variable annuities offer:

  • Death benefit: If you pass away before you start getting payments, your beneficiary will get a payout from the carrier. 
  • Tax deferral: You don’t pay taxes on earnings until you withdraw money from the annuity.
  • Possible inflation hedge: If your investment portfolio does well, you could potentially see an increase in your payments, which will help you keep up with inflation. 
  • Initial investment protection: Usually, you’ll receive access to the amount you invested.
  • Payments for life: You have the choice to receive payments for the rest of your life, even if your portfolio loses money. 

Variable annuities aren’t the only annuities you can buy through our insurance agents. If you prefer an alternative, ask us about fixed annuities and indexed annuities.


Learn More About Variable Annuities

See how an investment today can supply guaranteed income for life. Call (316) 260-3331 to buy an annuity through Cornerstone Senior Advisors.