October 25, 2014

What is an Annuity?

Welcome to whatannuity.org, where we introduce annuities gently by answering the basic question What is an annuity? and then introduce details in a user-friendly way.

Types of Annuity


Immediate Annuity

Immediate Annuities
Immediate annuity: you make a lump sum payment to an insurance company. In return, they provide you with a stream of regular payments – traditionally until the end of your life, but other timescales are possible.
Deferred Annuities
Deferred annuity: this allows you to save in a tax efficient way, usually for retirement. You accumulate a lump sum, which you can either keep or annuitize – effectively converting its behavior into an immediate annuity.


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If you’ve saved a lump sum and are close to retirement, it’s worth learning more about immediate annuities. If you don’t have a worthwhile lump sum yet, you should learn more about deferred annuities.

Whether we are talking about immediate or deferred annuities, there are three basic annuity investment types: the fixed annuity, the indexed annuity and the variable annuity. It’s worth learning about all of them, to help you make a more informed decision about which is best for you.

Types of Annuity Investment –
Your Choice Determines How Your Money will be Invested and Managed


Fixed Annuity Variable Annuity Indexed Annuity