Are Variable Annuities Securities?

Unlike other types of annuities, variable annuities are considered securities. This means that they are regulated by the SEC and an agent would need to be licensed to sell securities to help you procure one. With variable annuities, your money is invested into a portfolio and you run the risk of losing your principal.

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  • Written By
    Christian Simmons, CEPF

    Christian Simmons, CEPF

    Financial Writer, Certified Educator in Personal Finance

    Christian Simmons is a financial writer who has worked professionally as a journalist since 2016. As an active member of the Association for Financial Counseling & Planning (AFCPE), Christian prides himself on his ability to break down complex financial topics in ways that readers can easily understand.

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  • Edited By
    Lamia Chowdhury
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    Lamia Chowdhury

    Financial Editor

    Lamia Chowdhury is a financial editor at Lamia carries an extensive skillset in the content marketing field, and her work as a copywriter spans industries as diverse as finance, health care, travel and restaurants.

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  • Updated: May 23, 2024
  • 3 min read time
  • This page features 4 Cited Research Articles

Key Takeaways

  • Variable annuities are considered securities and are regulated by the SEC. Almost all other annuity types are regulated at the state level.
  • Variable annuities involve investing your money and exposing you to principal loss, meaning they operate more closely to a portfolio than a traditional annuity.
  • If you have maxed out common retirement savings options like your 401(k) or IRA, a variable annuity may serve as an additional way to keep saving.

Why Variable Annuities Are Considered Securities

It’s important to remember that annuities are not investments; they are insurance products that are typically purchased from carriers or providers.

For this reason, they are typically regulated at the state level and not considered securities since they are essentially an exchange of money for a product.

But variable annuities operate quite differently.

These annuities come with notably more risk — including the possibility of losing your principal — in exchange, allowing you to directly invest in things like stocks and bonds through mutual funds.

Due to how they function, and the level of risk attached, variable annuities are considered securities. 


Variable annuities and RILAs are the only two types of annuities registered by the SEC.

Since variable annuities are regulated by the SEC, you will need to work with an agent who is licensed to sell securities to purchase one. 

It’s also important to note that variable annuities don’t make sense for everyone as they are different from the straightforward and low-risk choices of SPIAs or MYGAs.

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How Variable Annuities Compare to Other Types of Securities

Variable annuities function differently than other types of annuities. They are more similar to brokerage accounts.

When you purchase a variable annuity, your payments are essentially invested into a portfolio. This portfolio is often made up of mutual funds, allowing you to invest in and possibly benefit from things like stocks and bonds.

You can then manage the amount and distribution toward different types of investments.

Variable annuities essentially provide you access to investing in other types of securities. 

Why Are Other Types of Annuities Not Considered Securities?

Other types of annuities are not considered securities because they do not overtly function as investments and don’t include exposure to market risk.

Financial Instruments That Are Not Securities

  • Most annuities
  • Cash
  • Checks
  • Interest in a deposit account

Source: Tennessee Department of Commerce & Insurance

Other types of annuities are more straightforward, operating more like a transaction.

With fixed or immediate annuities, you typically pay a premium for the product in exchange for receiving growth at a set rate along with eventual lifetime payments.

There is little risk involved with these types since your principal is protected and you are not directly exposed to market risk.

The only other type of annuity where the market plays a key role is a fixed index annuity. Still, this operates within a controlled environment where your annuity growth is tied to the performance of an index. You are not at risk of losing your initial premium with a fixed index annuity.

While other types of annuities are not securities, they are still regulated at the state level.

How Much Risk Do Variable Annuities Carry?

Variable annuities have a heightened risk because they don’t guarantee principal protection, and growth can depend on the performance of your investments.

The trade-off is the potential for more growth than you would see in a traditional annuity product. For this reason, variable annuities tend to make sense for a different audience than something like a SPIA or MYGA.

Say that you are saving for retirement and have already maxed out contributions to your 401(k) or IRA. You could consider purchasing a variable annuity as another vehicle to keep working toward increasing your retirement savings.

While the risk is higher, you can achieve different goals than with other traditional annuity options.

Most other types of annuities are aimed toward conservative investors since they offer principal protection and allow for growth in a predictable and controlled environment.

Please seek the advice of a qualified professional before making financial decisions.
Last Modified: May 23, 2024
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