What type of annuities may involve different rates of return on invested funds?

Variable annuities are designed to offer policyholders the potential for different rates of return on their invested funds, which is one of their primary characteristics. These annuities are not tied to a fixed interest rate; instead, their performance is linked directly to the performance of a selection of underlying investment options, often including stocks and bonds. As a result, the returns can fluctuate, depending on the market performance of the chosen investments, meaning that there is a potential for higher returns in favorable market conditions, but also a risk of losses if the market underperforms.

This contrasts with immediate annuities and fixed annuities, which provide guaranteed payouts based on predetermined interest rates and do not offer the same level of investment variability. Beneficiary annuities typically pertain to death benefits rather than variations in investment returns and do not represent a type of annuity that would provide differing rates of return on invested funds.