one whose periodic payments are dependent on some undetermined or uncertain outcome such as the value of a securities portfolio. Acontract between an investor and insurance company may take this form and subsequently the periodic payments would change as a function of the changes in applicable securities prices or rates of return. A variable annuity may also consist of payments that vary depending on changes in money market interest rates.

life insurance annuity contract whose value fluctuates with that of an underlying securities portfolio or other index of performance. The variable annuity contrasts with a conventional or fixed annuity , whose rate of return is constant and therefore vulnerable to the effects of inflation. Income on a variable annuity may be taken periodically, beginning immediately or at any future time. The annuity may be a single-premium or multiple-premium contract. The return to investors may be in the form of a periodic payment that varies with the market value of the portfolio or a fixed minimum payment with add-ons based on the rate of portfolio appreciation.

life insurance annuity whose value fluctuates with that of an underlying securities portfolio or other index of performance. The variable annuity contrasts with a conventional or fixed annuity, whose rate of return is constant.