Annuities offer a guaranteed1 stream of income, either for life or for a specified number of years. An annuity, which is a type of tax-deferred investment, is a contract between an insurance company and an annuity owner. In exchange for a payment (or series of payments), the insurance company agrees to pay a stream of income in the future.
An immediate annuity is usually purchased with a single premium and income begins within 12 months of the issue date. You decide when payments will start (within the 12 months) and how long they will last. There are two types of immediate annuities: fixed and variable.
Immediate Fixed Annuity
An immediate fixed annuity provides a guaranteed and predictable stream of income during the payout period.
Immediate Variable Annuity
An immediate variable annuity provides a guaranteed stream of income. However, payments fluctuate based on the performance of the investments selected.
A deferred annuity is specifically designed to help accumulate assets for retirement. It also offers the ability to turn those assets into a guaranteed stream of income in the future. You decide when payments begin and how long to receive income. There are two types of deferred annuities: fixed and variable.
Deferred Fixed Annuity
A deferred fixed annuity earns interest during the contract’s accumulation period. The interest rates are set by the issuing company and will not be lower than the minimum guaranteed interest rate in your contract. A contract’s accumulated assets can be converted into a guaranteed stream of income later.
Deferred Variable Annuity
A deferred variable annuity offers variable investment choices (and usually a fixed account) in which the contract owner can invest. During the accumulation period, the investment return and value of the annuity will fluctuate in accordance with the investments selected. A contract’s accumulated assets can be converted into a guaranteed stream of income for the future.