There are many different types of variable annuity contracts, but they are only different in appearance rather than what it can do for you. All variable annuity contracts offer tax deferral and other guarantees that only annuities can offer. What is generally different between one variable annuity contract from another one is the structure of the contract.

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What is a Variable Annuity

A variable annuity, or VA for short, is a tax deferred investment vehicle that allows you to invest your money in sub-accounts, similar to mutual funds. A variable annuity allows investors to differ taxes until a later date, much like a 401 (k) plan or an IRA account.

While an investor may invest qualified money in a variable annuity, such as an IRA, a variable annuity can be purchased with after tax dollars. This is referred to as a non-qualified variable annuity, but even though it is a non-qualified variable annuity many of the same restrictions are imposed on this product as if it where a IRA or 401 (k) plan.

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