Which of these is a benefit of having a variable annuity?

A variable annuity offers the potential for higher returns because it allows the policyholder to invest in a variety of investment options, typically mutual funds, which can fluctuate in value. This investment flexibility means that, instead of receiving a fixed payout, the returns can increase based on the performance of the chosen investments. Essentially, the greater potential for growth in the account value comes from the underlying investments that reflect market performance.

Investors who are willing to take on some additional risk have the chance to benefit from market upswings, which can lead to higher returns compared to more conservative financial products. This is especially appealing for those looking for long-term growth in their retirement funds.

Other options may not align with the nature of variable annuities. For example, while stable returns might be a feature of fixed annuities, variable annuities inherently expose investors to market risks, meaning returns can vary. Guaranteed life coverage is typically a feature found in life insurance products rather than annuities, which are designed primarily for retirement income. Immediate cash access also does not characterize variable annuities, as they are more focused on providing income over time rather than offering liquidity akin to a savings account.