Final answer:
Variable annuities differ from mutual funds by offering a death benefit and typically include insurance features with a tax-deferred growth of earnings. They provide a blend of investment opportunity and protection, useful for retirement planning.
Step-by-step explanation:
When saving for old age, individuals have a variety of private market options to consider. One such option is a variable annuity, which differs from mutual funds or other financial products in several ways, most notably offering a death benefit to secure a beneficiary's financial future in case of the owner's passing. Unlike mutual funds, variable annuities typically have insurance features that provide some level of guarantee on the investment. Additionally, they allow for tax-deferred growth of earnings, and withdrawals are typically made during retirement when the individual may be in a lower tax bracket. While each of these options, whether savings accounts, stocks, bonds, or mutual funds, come with different levels of risk, variable annuities provide a unique blend of insurance protection and investment opportunity, which can be especially appealing for those seeking a balance between growth and security for their retirement assets.