Annuities offer specific benefits. 

Learn about the basic facts of annuities below:

Common Factors Across Different Types of Annuities

• An annuity is a contract between you and an insurance company

• Opened with funds that the insurance company will then invest

• During the savings or "accumulation" phase you are making payments into the annuity, although some can be opened with one lump sum

• Because of the insurance benefits of annuities there are associated fees

• Death protection options

• Living benefit protection options

• Payments distributed during the payout or "annuitization/income" phase

• Primarily designed as a retirement investment option

• Tax-deferred earnings

• Lifetime income options

Immediate Annuities

• Income distribution begins right away 

• Single Premium Immediate Annuities (SPIA) payments begin right away after purchasing through a single premium

• You can set the "mode," or how often you will receive payments and for how long (your whole life, or for the next 30 years, etc.)

Fixed Annuities

• Similar to CDs in that the interest rate is set, yet in many cases these will pay higher interest rates

• Can be a deferred or an immediate annuity

• Set payouts can offer the convenience of predictability

Deferred Annuities

• This type of annuity contract delays payments until the investor elects to receive them

• Can be fixed or variable 

Variable Annuities

• Variable annuities allow for more account fluctuation up or down

• Insurance company invests in mutual-fund type investments aka "sub-accounts"

• Since it is an annuity the insurance company ensures you cannot loose below a certain amount of the account value