Is An Annuity Right for Me?

What are the different kinds of Annuities?    

There are several types of annuities, which range from guarantees of principal and interest, to no underlying guarantees. To get the most out of an annuity, it is important to know the options available and the pros and cons of each type.

  • Immediate Annuity: An annuity designed for income only. A single lump sum payment to an insurance company in exchange for a predetermined payout.
  • Deferred Annuity: An annuity designed for tax deferred growth until you need your money which can be taken in a lump sum or income stream.
  • Fixed Annuity:  A deferred annuity with guaranteed principal and interest for a set period of time. Fixed interest rates can be guaranteed for a term of the annuity or adjustments on an annual bases and determined by the insurance company or in a way specified in the annuity contract.
  • Fixed-Indexed Annuity: A variation of a deferred fixed annuity in which the gains are determined by a stock market index, such as the S&P500 or DJIA. The FIA has a guarantee of principal and minimum interest, fixed rate option, and the potential of indexed linked returns.
  • Variable Annuity: An annuity in which the insurance company invests your money, less any applicable charges, into stock market sub accounts based upon your risk tolerance. The money can be invested into stocks, bonds, or other equities. If the market does not do well, you may lose some or all your investment.