Ace the Florida Life & Health Insurance Test 2026 – Dive In and Secure Your Success!

Variable annuities carry more risk for the investor because their returns are tied to the performance of investment options within the annuity, such as mutual funds or stock market indices. This means that the value of the variable annuity can fluctuate based on market conditions. Investors may experience gains during favorable market conditions, but they also face the risk of losses if the market performs poorly.

Unlike fixed annuities, which provide guaranteed interest and stable payments, variable annuities do not have a guaranteed return, making them inherently riskier. Immediate and deferred annuities can also be structured with fixed or variable payouts, but the defining characteristic of variable annuities is their dependence on market performance. Therefore, choosing a variable annuity means accepting a greater level of investment risk in hopes of achieving higher returns.