Fixed annuity provides the following features

Variable Annuity

A variable annuity is variable from standpoint that the annuitant may receive varying rates of return on the funds that are paid into the annuity. Thus,the value of the investment account in the annuity may be subject to variation.

Variable Annuity

A variable annuity serves as hedge against inflation. Listed below are the three main characteristics of variable annuities: Underline investment - the payments that the annuitant invest into the variable annuity are invested in the insurers separate account, not their general account. Interest rate - the issuing insurance company does not guarantee a minimum interest rate. License requirements - a variable annuity is considered a security and is regulated by the securities exchange commission(SCE) in addition to the state insurance regulations.

Separate Account

Premiums paid during the accumulation period are placed in the insurers separate account that is usually invested in stocks. This means that the investment will vary according to the fluctuation in stock prices.

Accumulation Units

Variable annuities purchase accumulation units in the fund, which is similar to buying shares in a mutual fund. Accumulation units represent ownership interest in the separate account. Upon annuitization,the accumulation units re-converted to annuity units.

Level benefit amount

With fixed annuities ,the annuitant knows the exact amount of each payment received from the annuity during the annuity period.This is called level benefit amount.