Fixed annuities invest your premium into conservative, long term securities (usually bonds) chosen by the company. These steady investments allow the company to guarantee you fixed payments later on. Your payments are also guaranteed to last a number of years or a lifetime, determined in advance.
Variable annuities are invested in stocks and more risky investments which the annuity holders choose themselves. They may have some guaranteed elements, but also have the potential to pay more than a fixed annuity, or less than a fixed annuity, due to that element of risk.
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Variable annuities are invested in stocks and more risky investments which the annuity holders choose themselves. They may have some guaranteed elements, but also have the potential to pay more than a fixed annuity, or less than a fixed annuity, due to that element of risk.