Which feature of a variable annuity can significantly impact returns?

The performance of the selected investment options is a crucial feature of a variable annuity that can significantly impact returns. In a variable annuity, the contract holder can allocate their premium payments among various investment options, typically mutual funds or similar securities. As these underlying investments fluctuate based on market performance, the returns on the annuity will also vary accordingly.

This variability can lead to higher potential returns compared to fixed annuities, where the interest rate is predetermined and does not change based on market conditions. Therefore, the performance of the chosen investment options directly influences the overall growth of the annuity, making it a central aspect of their returns.

In contrast, the other features mentioned, such as a fixed interest rate or the age of the annuitant, do not introduce the same level of variability or potential for higher returns linked to market performance. While age can influence some aspects of annuity pricing and payouts, it does not directly affect the returns in the same manner as the investment options chosen.