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Simple English definitions for legal terms
variable annuity contract
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A quick definition of variable annuity contract:
A variable annuity contract is an agreement between two or more parties that creates obligations that can be enforced by law. It is a written document that sets forth the terms of the agreement. A contract can refer to the series of actions taken by the parties, the physical document itself, or the legal relations resulting from the agreement. In simple terms, a contract is a promise or set of promises that the law recognizes as a duty, and if broken, can be remedied.
A more thorough explanation:
A variable annuity contract is an agreement between two or more parties that creates enforceable obligations. It is a legal document that sets forth the terms and conditions of the agreement. The term "variable" refers to the fact that the value of the annuity can fluctuate based on the performance of the underlying investments.
For example, an individual may purchase a variable annuity contract from an insurance company. The contract may require the individual to make regular payments into the annuity, and in exchange, the insurance company promises to pay the individual a stream of income in the future. The amount of the income payments will depend on the performance of the investments held within the annuity.
The variable annuity contract is a binding agreement that creates legal obligations for both parties. If either party fails to fulfill their obligations under the contract, the other party may have legal recourse to enforce the terms of the agreement.