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HELP! I’M RUNNING OUT OF MONEY

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The available subaccounts are generally managed by or for the insurance company. However, there are companies that offer variable annuities that have a number of nonproprietary funds from other mutual fund companies, such as Oppenheimer or Janus. The avail- ability of these separate accounts typically varies between the differ- ent types of variable annuities offered, but annuity owners usually have a wide variety of choices.

The term “variable annuity” also applies when the annuity’s pay- out varies from period to period. Under the general terms of an annu- ity contract, the owner may stipulate to have the contract pay out a fixed amount of money per period, or he or she may choose to have a fixed amount of units (or annuity units) to be distributed each period. If the owner chooses to have a set amount of units as the pay- out, each payout will vary because the dollar amount is based upon the underlying subaccounts and their current prices per share. Thus, if the owner elects to receive 100 units per month, one month he or she may receive $550, while the next month he or she may receive $700. Generally, unless otherwise specified, when the payout comes out of the annuity, it will come proportionately from each of the sub- accounts that have value.

COMBINATION PLANS

Most individual annuities give the annuity owner the option of investing a portion of the premiums in both fixed and variable sub- accounts. This way, the owner will realize some stability by earning a specified interest rate, while also being able to take advantage of current market conditions.

EQUITY INDEXED ANNUITIES

Equity indexed annuities, or EIAs, are a relatively new form of fixed- dollar annuities. They blend minimum insurance company guaran- tees with linking the annuity’s interest earnings to a stock market index, such as the S&P 500. While there are many different designs of EIAs being sold, we use just one as an example.

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