Variable annuities make money through a combination of investment returns and insurance features. When an individual purchases a variable annuity, they have the opportunity to allocate their funds among various investment options, such as mutual funds. The performance of these investments directly impacts the value of the annuity. Additionally, variable annuities often offer insurance features, such as death benefits and living benefits, which can provide additional sources of income. The insurance company charges fees for managing the investments and providing these insurance features, which contributes to their revenue. It's important to note that the value of a variable annuity can fluctuate based on the performance of the underlying investments, and the income generated is not guaranteed. Variable annuities generate income through investment returns, insurance features, and fees charged by the insurance company.