Variable Annuity Law and Legal Definition
A Variable Annuity is a contract between a person and an insurance company, under which such person make a lump-sum payment or series of payments. In return, the insurer agrees to make periodic payments to the insured beginning immediately or at some future date. Insured can choose to invest purchase payments in a range of investment options, which are typically mutual funds. The value of account in a variable annuity will vary, depending on the performance of the investment options one has chosen.
Variable annuities also offer many of the features of other types of annuities. These include: tax-deferred growth of earnings; a death benefit that will pay to beneficiary the greater of insured's account value or a guaranteed minimum amount, such as total purchase payments; and the option of receiving a stream of periodic payments for either a definite period, such as 20 years or an indefinite period, such as lifetime or the life of one's spouse.