Fixed annuities offer general accounts with minimum guarantees and "fixed" (or declared) interest, and are usually intended for conservative buyers seeking the advantages of tax-deferral. Because interest rates are pre-determined or declared annually, buyers have a good idea of what their account values will be from year to year.

As noted earlier, however, variable annuities have separate or "subaccounts" ranging from conservative to aggressive, where more aggressive investors can allocate all or a portion of their funds. In effect, subaccounts are investment portfolios offered in variable annuity contracts, and like mutual funds, the separate subaccounts range from very conservative (like money market subaccounts) to more aggressive (like aggressive growth fund subaccounts).

Typical among these additional investment options are fixed subaccount options so investors can be as conservative as a fixed annuity buyer. Unlike fixed annuities, however, variable annuity subaccounts have "rolling" values depending on the performance of the underlying funds selected. Naturally, those subaccount values may go up or down.

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