A variable annuity is a contract between the annuity owner and a life insurance company. The insurance company agrees to provide either a regular stream of income (an annuity) or a lump-sum distribution at some future time (generally, once the annuity owner retires or reaches age 59 1/2) in return for payment of one or more deposits. Deposits are invested by the insurance company in one or more securities portfolios and earn income and/or capital appreciation without any current taxes until paid out to the annuitant. Deferred variable annuities require the investor to wait a specified amount of time prior to receiving payments of income.

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