A variable annuity is a way to get the stability of a traditional annuity product with the gains of an investment account—for a price.
Unlike with a more common fixed annuity, a variable annuity lets you invest in subaccounts like mutual funds while delaying taxes on your gains. When ready, you can turn your investment balance into future income payments. While your growth and future income depend on investment performance, insurers often promise a minimum return or payout. However, many variable annuities charge high fees and restrict your ability to take money out early.