Types of Annuities

Annuities can be structured according to a wide array of details and factors, such as the duration of time that payments from the annuity can be guaranteed to continue. As mentioned above, annuities can be created so that payments continue so long as either the annuitant or their spouse (if survivorship benefit is elected) is alive. Alternatively, annuities can be structured to pay out funds for a fixed amount of time, such as 20 years, regardless of how long the annuitant lives.

Immediate and Deferred Income Annuities

Annuities can begin immediately upon deposit of a lump sum, or they can be structured as deferred benefits.

Immediate Annuity begins paying immediately after the annuitant deposits a lump sum.

Deferred Income Annuities, on the other hand, don't begin paying out after the initial investment. Instead, the client specifies an age at which they would like to begin receiving payments from the insurance company.

Depending on the type of annuity you choose, the annuity may or may not be able to recover some of the principal invested in the account. In the case of a straight, lifetime payout, the payments simply continue until the beneficiary dies. If the annuity is set for a fixed period of time, the recipient may be entitled to a refund of any remaining principal–or their heirs, if the annuitant has deceased.

Fixed and Index Annuities

Fixed Annuities provide you with a guaranteed interest rate on your initial premium deposit. Someone who desires principal guarantee and a guaranteed rate of interest would embrace a traditional fixed annuity. Fixed annuities pay the same income payment at regular intervals for the entire duration of the payout period.

Index Annuities are a good choice if you want the opportunity to earn indexed interest, but don’t want to risk losing money in the market. An indexed annuity offers investors the potential to participate in some of the upsides of the stock market. If the markets perform well, you’ll make money. If the markets doesn't perform and takes a dip, you’ll receive a fixed rate of return or no loss of your original investment instead.

*Other riders may be purchased to add a death benefit to the agreement or to accelerate payouts if the annuity holder is diagnosed with a terminal illness.