A variable annuity starts with an accumulation phase where you make purchase payments. You can allocate your funds to different investments. For example you could designate 10% to a US stock fund, 60% to a bond fund, and 30% to an international stock fund. The money has potential to increase or it may decrease depending on the performance. 

At the beginning of the payout phase you receive your purchase payments plus possible income and gains as a lump-sum payment or intervolved payments. For a stream of payments you can choose how long the payments last and how much you want to take out. 

The death benefit allows you to select a beneficiary with the options of all the money in your account or a guaranteed minimum.

For more information click this link: Variable Annuities