deferred variable annuities

A deferred variable annuity is an investment product with aspects of a retirement plan plus an insurance rider. The "deferred" part means that the individual plans to wait to receive money, and will likely be penalized with a surrender charge if he changes his mind and takes some money out before the surrender period has elapsed. The "variable" part means that when the individual begins to receive payments, those payments will--yes--vary. Is the "annuitant" assured of getting his principal/original investment back? No. During the "accumulation phase" his beneficiary would receive at least what he put into the contract if he were to die, but that's a different matter. Because of the surrender charge, a deferred variable annuity is only suitable for someone with no liquidity needs on this money. They also should have maxed out all other retirement vehicles before putting money into a variable annuity. The ideal candidate for a deferred variable annuity is someone who has already maxed out the 401K and any other plans but still has lots of money he wants to grow tax-deferred. As long as he doesn't need to touch this money for a while and as long as he's comfortable being in the stock and bond markets, subject to all kinds of investment risk, the product may be suitable.