Chris-Magnussen-14-What is a variable annuity
Video Transcript
A variable annuity is actually a little bit different type of insurance It is an annuity, but because it actually has securities involved, it is regulated at a different level. So you have to have a securities license to be able to work with them, first of all. But the main thing to consider with variable annuities is that the fees can be a lot higher than what most people are willing to pay. And when people tend to think annuities are expensive, this is typically the type of annuity that they're thinking of. The biggest thing to consider with the variable annuity and a reason why I don't find them suitable for most people that I work with is that most people when they're in or near retirement can absorb losses in a way that they were able to while they were working and can replace those invested dollars, right? And in a variable annuity, you can gain, but you very well could lose your principal as well.
