What’s the difference between a fixed and variable annuity?

A fixed annuity is a contract offered by an insurance company that is much like a bank CD. You deposit a certain amount of money and the insurer agrees to pay a certain interest rate over a specified period of time.

A variable annuity differs from a fixed annuity in that inside a variable annuity are investments similar to mutual funds. These investments are called subaccounts, and the value varies based on the performance of the investments.

For more information, read our recent article: Difference Between Fixed and Variable Annuities.