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Variable Annuity is an investment option that can secure your future retirement if the tides turn out good for you as you invest in it. Several insurance companies in the US offer this kind of annuity together with some other types.  You’ll always benefit from them if you care to know some details involved.

Basically, Variable Annuity is of two major types namely Deferred Variable Annuity and Immediate Variable Annuity.  Let’s examine them differently.

Deferred Variable Annuity

This is the commonest type of Variable Annuity most people usually go for. It allows your investment to accumulate and yield compound interest over a period of years. In most cases, this type is tax deferred. You’ll only pay tax when you want to make your cash withdrawal at a future date.

In some cases, deferred variable annuity can be converted into income annuity when the contract owner retires.  In such situation, your payments are distributed on monthly basis for a period of time you choose. You also have the option of cashing out all your money at once if you want that.

The accumulated nature of deferred variable annuity makes it more profitable. You can easily start off with a small initial premium and then allow it to grow over time. If the economic market turns out in your favor, your small investment will turn out to be very big later on. You’ll also enjoy the deferred tax benefit that comes with this kind of investment. The longer you extend your withdrawal date, the greater the tax benefit becomes.

Immediate Variable Annuity

This option allows you to receive payment monthly even immediately after the first investment is made. You’ll start receiving the dividends even in the very first month. There’s also a lifetime income guarantee on this kind of investment. You have to make a lump sum deposit in your portfolio. This will give you room to diversify your investment on various options such as bonds, stocks and mutual funds.

It’s good you know that immediate Variable Annuity is equity based. Your investment has the potentiality of decreasing in value based on the performance of the economic market. It can as well increase if the market is doing well. In any case, you’ll always enjoy instant monthly payment if the investment is doing fine.

Having known about the two kinds of Variable Annuity, you don’t need to jump into conclusion by choosing any of them as you desire. There’s the need to make proper inquiries before taking any step. You need to know the kind of insurance company you’re dealing with. You also need to know about the available offers the company is having. This will help you make the right decision. It’s also very necessary to engage the services of a good financial adviser to help you in making the right decisions. Through this means, you’ll always gain a lot when you decide to invest in any kind of annuity. You’ll always secure your future retirement period in the process.