Variable Annuities: Get The Best Advice

A variable annuity can be a valuable financial tool that can help achieve different financial goals. Variable annuities are investment options offered by insurance companies. They can provide individuals with an income stream during their retirement years. Variable annuities have various key features, benefits, and potential considerations. Unfortunately, too often agents sell variable annuities that are not suitable for the investor. If you have concerns about a variable annuity that you have been sold, Veach Legal can review the annuity for you to see if you might have a claim.


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Understanding Variable Annuity

A variable annuity is an official contract between an insurance company and an individual. This annuity is designed to grow funds for retirement and then convert those accumulated funds into an income stream during retirement. This annuity is different from fixed annuities in that the rate or returns depend on the performance of the investment option chosen by the annuity holder. In fixed annuities, the rate of returns is predetermined and guaranteed by the insurance companies. A variable annuity can be a valuable option to make a stream of incoming for your old age and should be considered by people near retirement.

Deferred Variable Annuities vs. Immediate Variable Annuities

Insurance companies offer two main types of variable annuities: deferred variable annuities and immediate variable annuities. A deferred Variable Annuity is a variable annuity that gives the annuity holder to invest in funds for some specific period. The time for investment is usually during their working years to grow their retirement savings. The investment options within the annuity are linked to mutual funds. This allows you to get growth which is dependent on the market performance.

On the other hand, in the Immediate Variable Annuity, the annuity holder starts receiving payments immediately or within a short period after buying the annuity. This can be advantageous for those who are retired from the services and looking for a consistent, guaranteed income stream for their old age.

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Variable Annuity Contract

Benefits of Variable Annuities

Variable annuities offer various advantages that can be beneficial for people planning for retirement. These benefits include market exposure and growth, tax-deferred growth, and lifetime income options. Unlike a fixed annuity, which offers a guaranteed return, variable annuities provide the investor with the potential for higher returns. More returns are because these annuities are invested in mutual funds. Plus, you also get exposure to the market, which can be advantageous during periods of economic growth.

The second benefit is tax-deferred growth, meaning investment monetary gains are not taxed until you withdraw funds. Variable annuities provide lifetime income options and can be customized and structured to provide a guaranteed stream of income for life. This benefit of variable annuities can ensure you will not outlive your retirement savings.

Legacy Planning

Variable annuities are a beneficial option for your family and loved ones. It allows you to pass on your money and assets to your children and make their future secure. It also allows you to customize your annuity contract according to your will and protect your family's well-being for generations.

Wealth Accumulation Potential

Another benefit of variable annuities can be wealth accumulation. Savings is all about making your hard-earned money saved for your future. This has great potential, as investing your money in mutual funds can leverage market growth.

Variable annuities offer people an opportunity for wealth accumulation through their investments. In variable annuities, there is a chance for policyholders to invest their money in sub-accounts, which are similar to mutual funds. Fixed annuities do not give this opportunity. The sub-accounts in which investment has been made are further invested in asset classes like real estate, bonds, stocks, etc. These investments allow the investors to get higher returns. With time, the invested amount grows, ultimately increasing the annuity's value. This way, the policyholders get more financial benefits, accumulating wealth.

Variable annuities have a market risk associated with them. Still, the potential of wealth accumulation is an aspect that attracts investors to invest in it and get a higher return on investments.

Tax Advantages and Other Benefits

If you are near your retirement and looking to invest in annuities, it's a great decision. The variable annuities give relaxation in taxes and also offer other benefits. The earnings within a variable annuity grow on a tax-deferred basis. The earnings keep on growing until you begin making withdrawals. Your investments have the potential to compound faster since taxes on investment gains are postponed.

They are postponed until you receive income payments. Another tax advantage of a variable annuity is that you can get more benefits if you plan to withdraw money during retirement when your tax bracket may be lower.

Customization & Flexibility

Variable annuities offer some advantages of flexibility and customization. You can customize the annuity contract according to your convenience and understanding. Along with a steady long-term income, the customization can give you peace of mind and a secure future for yourself and your children.

Variable annuities can offer a benefit in terms of flexibility and customization for investors looking for retirement planning solutions. These financial products allow you to personalize your investment portfolios within the annuity. This also allows you to choose from various investment options, including mutual funds, bonds, and stocks. This aspect of investment flexibility empowers you to align your annuity holdings with the market, risk tolerance, and investment goals. The customization option can ensure that you can structure the variable annuities to reflect your financial situation, creating a versatile foundation for your long-term retirement strategy.

Risks Associated With Variable Annuities

Variable annuities are an option to invest your money, but potential risks are also involved. You should know all the associated risks to make an informed decision. Financial information is necessary to avoid financial loss; therefore, you should gather all the relevant information regarding annuities and their potential returns. The risks of variable annuities include market volatility, fees, and lack of liquidity.

Market volatility means that the performance of variable annuities is associated with the underlying investment options. It is understood that the value of an annuity will fluctuate and can cause financial loss. You should keep this in mind while investing in variable annuities. However, these annuities have fees which include insurance-related fees and investment management fees. Before investing, you should read all the terms and conditions for the associated charges.

The third thing to consider is the need for more liquidity. These annuities are designed as long-term retirement and underlying investments. So there is a time and age limit involved. If you are planning to Withdraw funds from a variable annuity before a certain age may result in surrender charges and tax penalties.


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Risk Assessment Services

When considering a variable annuity contract, knowing the inherent market risk associated with this type of investment is essential. At the same time, variable annuities offer the chance for higher returns and consistent income payments during retirement. They also come with the possibility of losing money due to market fluctuations. Individuals must carefully assess their risk tolerance and long-term financial objectives before investing in a variable annuity contract.

Variable annuities are a valuable and helpful tool in retirement planning as it gives the potential for tax advantages and market growth. They come with complexities and inherent risks that must be thoroughly understood before deciding.

Schedule a Consultation With Veach Legal

If you are looking for a professional legal firm that provides you legal representation regarding variable annuities, you should contact us immediately. We are also trained in providing legal services in broker misconduct, securities fraud, fraud investigations, class actions, and arbitrations. Contact us today to schedule a consultation and take the first step toward securing your financial future.

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