2. Immediate- you give a company a lump sum of cash now in
exchange for an income stream over time.
Fixed- Lump sum or premiums paid over time that
accumulate, tax deferred, and at a fixed rate established
annually by the issuing company.
At some future point, principle and interest will be
returned to the buyer or the accumulated value can be
annuitized to turn the account into an income stream.
Variable – Rather than the certainty of a fixed rate, the
Variable Annuity offers a variable rate of return generated
from sub-accounts, usually mutual funds and bonds, during
your accumulation phase.
The key here is that you are invested in the securities
market and subject to the whims of an unstable asset.
So, variable annuities don’t carry the same principle and
growth guarantees that other types of annuities offer.
Because variable annuities are securities products they
are also regulated by the SEC and can only be sold by
registered securities representatives.
Fixed Index- This is basically a fixed annuity with a different
method of crediting interest. The principle account balance is
protected from downside loss and appreciation is based on
the performance of an external market index.
Different Types of Annuities Explained