A variable annuity is a type of investment product offered by insurance companies that allows individuals to save for retirement. It combines features of both insurance and investment, enabling policyholders to invest their premiums in various investment options, such as stocks and bonds. The value of the annuity can fluctuate based on the performance of these investments. When the policyholder decides to withdraw funds or receive payments, the amount can vary depending on the investment performance. This means that while there is potential for higher returns, there is also a risk of losing money. Variable annuities often come with fees and charges, which can affect overall returns.