Variable annuities offer strong growth potential and considerable risk all at once. Because the returns you earn through a variable annuity are based on the performance of an investment portfolio, you stand the chance of losing money.

Are Variable Annuities professionally managed?

Variable annuities and mutual funds are very popular investments. They both offer the average investor the benefits of professionally managed money and diversification. Mutual funds are part of an investment strategy while variable annuities are an investment strategy.

What are the risks of variable annuities?

Variable annuities involve investment risks just like mutual funds do. If the investment choices you selected for the variable annuity perform poorly, you could lose money. Contract fees may go towards your financial professional’s compensation.

What is the loss on a variable annuity?

The loss you realize is the difference between the amount you had invested in the annuity, your basis, and what your selling price. For example, if you purchased a variable annuity for $25,000 and surrender it for $15,000 several years later without ever having withdrawn anything from it, you would realize a $10,000 loss.

Can you deduct loss on non qualified variable annuity?

While annuities are usually known for their security, variable annuities can lose value. 1. Can You Deduct the Loss on a Non-Qualified Variable Annuity? 2.

How long does a deferred variable annuity last?

Deferred variable annuities are long-term investments. Getting out early can mean taking a loss. Many variable annuities assess surrender charges for withdrawals within a specified period, which can be as long as 6 to 8 years.

What makes a variable annuity a good investment?

Insurance companies issuing variable annuities provide a number of specific guarantees. For example, they may guarantee a death benefit or an annuity payout option that can provide income for life. These guarantees are only as good as the insurance company that gives them.