You choose the portfolios in which you will invest from among those offered. The insurance company backing the annuity develops a relationship with a professional money manager, whose experts decide which specific stocks and bonds will be a part of each portfolio. In some newer variable annuities, you can take advantage of the acumen of more than one expert money manager, allowing you even more flexibility in structuring your investment. The performance of your investment does not depend on the insurance company's portfolio. Only the performance of the variable portfolios you have chosen will affect your results.
Some annuities provide more generous options.
They may provide a special program in which the insurance company guarantees a return of your premium when you place an appropriate portion of that premium in a fixed interest option. Meanwhile, the other part of your premium can be invested in variable portfolios that have the potential to provide higher returns. Most variable annuities provide for withdrawal of a specified amount free of charge. Withdrawals in excess of the amount specified are possible but, in the early years of the contract, may trigger surrender charges. An MVA ensures that you receive the market value of assets withdrawn before their maturity date, and may increase or decrease the value of your account.