The variable annuities are usually considered to be the wise choice for a retirement plan. However there are a few variable annuities pros and cons that are to be considered before making any decision. There are a few things you should ask to your financial advisors or insurance agent regarding any type of variable annuities. This will give you a clear picture of whether going for the variable annuities is a good choice or not.
The variable annuities are usually intended to be a long term investments, hence if you are looking for any short term investment plan, this is a big no. There are large numbers of variable annuities that you can invest. Basically there are two wide categories when we try to explain variable annuities. The guaranteed return and fixed rate of payments can be given out at the time of maturation. The other type of annuities are the variable annuities which also offer guaranteed returns but the type of investment that you do here are also related to stocks and mutual funds. This type of investment includes the added benefit from the stock market and mutual funds.
Let us discuss the pros of the variable annuities first.
First major benefit is that you get incredible amount of tax benefit. The main reason is the tax is not applicable until you start withdrawing money. Second added advantage is that the rate of interest can be lower compared to the other types of investments. You can have an assured inflow of return on your investment if you have chosen fixed annuities. The third advantage is that the risk is lower compared to other means of investments like the stock market. Another advantage is that there is no limit for the amount you invest if you are with 401k or IRA accounts.