Variable Annuity
Also called: variable annuities, annuity contract
A variable annuity is an insurance contract holding investment sub-accounts, wrapping market exposure in guarantees and tax deferral. The guarantees are real and the cost is high: total fees of 2–3% a year plus surrender charges lasting years are common. They are frequently sold into accounts that are already tax-deferred, such as an IRA or 403(b), where the tax benefit is worth nothing and only the fees remain.