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InvestHub.com's
Finance Dictionary and Glossary of Investment Terms

ariable annuity  

Definition 1.

A variable annuity is a contract between you and an insurance company or a bank in which you contribute money that grows tax deferred and receive a payout later, generally at retirement. Variable annuities differ from fixed annuities in that you decide how to invest your contributions. As a result, the size of your payout is variable it depends on the success of your investments. Contributions to an annuity are made after taxes but all capital in the annuity grows tax-deferred, similar to employer-sponsored retirement plans or traditional IRAs.
 
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