It s Your Money Changing variable annuities give investors more choices Insurance companies have been adding new features to variable annuities recently to make them more attractive to buyers.
Variable annuities are mutual funds wrapped inside a life insurance policy.
Earnings, which depend on the success of the funds you select, are tax deferred until they are withdrawn, either in lump sums or in regular payments, at which point they are taxed at your ordinary income-tax rates. The life insurance feature guarantees that if you die before you begin taking payments out, your heirs will receive at least what you invested in the annuity, even if the value of your account is lower than what you paid in. To this basic package, many insurers are offering buyers additional choices from which they can pick and choose, at a price. Sign up bonuses. Some insurers are offering a bonus of 1 to 5 percent of the initial annuity investment.