How Are Annuities Invested? 
There are basically three crediting methods used in deferred annuities : interest rate crediting , indice crediting and separate sub account crediting . Interest rates are generated by the companys predominately government bond portfolio . Most indexed annuities invest their interest rate returns in domestic and foreign index options . Variable annuities use equity and bond instruments in their separate sub accounts selected by the variable annuity owner . These separate sub account allocations are subject to market risk , i.e. you can lose money . 