Not every investor seeks a guaranteed rate of return. Many investors subscribe to the investment adage that the bigger the risk, the bigger the return – the smaller the risk, the smaller the return. Investing in a variable annuity can be compared to investing in a mutual fund.

Unlike fixed annuities, variable annuities offer few guarantees. In return for accepting more risk, the owner of a variable annuity receives higher potential returns. They offer the potential for higher long-term returns than fixed annuities, but payouts can fluctuate considerably, depending on the performance of the underlying investments.

When distribution from a variable annuity begins, the value of the annuity in each applicable sub-account is used to purchase annuity units. The number of annuity units then remains fixed, but their value may fluctuate based on the actual performance of the applicable sub-accounts, resulting in a higher or lower value being paid to the annuitant each month. While the income payments may fluctuate, they are guaranteed for life.

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