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