A type of transaction fee that applies if you withdraw some or all of your money from a variable annuity within a certain period of time, such as six to ten years, following each premium payment invested in the contract. This is known as the surrender period. The fee decreases each year until it becomes zero, although a new surrender charge period will begin with each new premium payment.  Surrender charges will reduce the value and the return of your investment.

In an attempt to attract purchasers, some insurance companies offer variable annuity contracts with "bonus credits." A bonus credit is the extra amount an insurance company agrees to add to the value of your contract-usually a specified percentage (typically ranging from 1% to 5%) of the payments you make during a certain time period. While bonus credits sound like free money, variable annuities with bonus credits may have higher expenses that offset any gain.

The price paid for borrowing money. It is expressed as a percentage rate over a period of time.

Interest rates may be fixed, meaning the rate is set and will not change, or may be variable or "floating," meaning the rate may move higher or lower over time.

This annuity has no accumulation phase. Instead, you start receiving annuity payments right after you purchase the annuity.

Variable annuity contracts typically have a "free look" period of ten or more days. During this period, you are free to terminate your contract without paying any surrender charges and you will receive a refund for the amount you paid. The "free look" period is a time for you to continue to ask questions so that you understand the variable annuity and are sure that it is right for you.

With a deferred annuity, you make payments to an insurance company, which will be free from taxes until you reach a particular age or a date specified in your contact.