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A variable annuity policy allows the owner to invest the policy values in a selection of separate accounts similar to mutual funds. Separate accounts could include money market funds and mutual funds invested in stocks and bonds. Both immediate and deferred annuities can be variable annuities. A variable annuity presents a higher risk to the owner because the cash value, current income payments, and deferred benefits could vary based on the investment performance of the separate account. The value and benefits of a variable policy are directly related to the investment funds and are not protected by the Idaho Life and Health Insurance Guaranty Association.