How Do Variable Annuities Make Money? 
The historical returns of variable annuities over long periods of time have shown returns . Of course this is no indication of future performance . Although variable annuities have a general account tied in interest rates , most investors prefer the separate sub accounts that use equity and bond investments . The returns or losses are either credited or debited against the net premiums -LRB- premiums that first pay the policy expenses . -RRB- A variable annuity is a security and an insurance product for investors that have a high effective tax bracket rate and have the risk tolerance for market returns , but the reality of market losses . A variable annuity can be a supplemental retirement income stream that can offer differing distribution options including lifetime annuitization . 