With the enhanced credit variable annuity (ECVA), the insurance company adds funds to the amount you initially agree to deposit in a variable annuity. If you agree to buy a $100,000 annuity they might offer to toss in an extra $10,000 on top of that just because they think you're swell, or need a push to close the deal.

How much they will add to your upfront deposit, or transfer from another annuity, depends on how much you buy, the more you plunk down the more they may give you as a percent of your total investment but get real, insurance companies don't give something for nothing. The penalties for withdrawal, how much and what interest rate or return you are allowed to get in the long run will be adjusted accordingly.

Based on the ECVA I was pitched, in addition to their "bonus contribution" they guaranteed you one years interest of 6% or more on the whole thing, when regular rates were 2%.To stretch the too good to be true factor even further, they guaranteed that after one year I would enter the stock market (the variable part) with a guarantee that I could never lose, if I tied up my money forever and agreed my gains would be limited. This clause is why I was considering swapping out of another variable annuity, but the new salesman wouldn't or couldn't get into details on those restrictions either.

Maybe they are a good deal, maybe not. The enhanced credit aspect aims at overcoming the objection that you will incur charges, sometimes steep ones, if you drop one annuity to buy another. The IRS allows you to do this tax free in a 1035 exchange, but you invariably incur a withdrawal penalty imposed by the original annuity. On the other hand, I was told you can write-off any losses in the first annuity against any gains in the second one, someday in the future.

If I had one piece of advise it would be to not enter into an enhanced credit annuity contract, or most annuities, without the advise of a fee based financial planner.