How it works
Fixed annuities provide declared rates; fixed indexed annuities use index-linked crediting methods; immediate and deferred income annuities can create scheduled payments.
Who may benefit
Individuals focused on principal protection, tax deferral or dependable income may evaluate annuities.
Important considerations
Surrender charges, liquidity limits, tax treatment, caps and participation rates must be reviewed. Annuities are not FDIC-insured bank deposits.
Educational information only. Product availability, pricing and eligibility depend on state, carrier and underwriting.
Questions to review before applying
- How long is coverage needed?
- What premium fits the household budget?
- Are benefits guaranteed or illustrated?
- What exclusions, waiting periods or surrender charges apply?
- How does this option compare with alternatives?
Annuities: A Deeper Review
What an annuity is
An annuity is a contract with an insurance company designed for long-term accumulation, income or both. Contract types differ significantly, so compare guarantees, crediting methods, liquidity, surrender charges, riders and tax treatment.
Common categories
- Fixed annuity: credits interest under contract terms.
- Fixed indexed annuity: credits interest using an index-linked formula while contract value is not directly invested in the index.
- Immediate income annuity: converts premium into scheduled payments that begin soon after purchase.
- Deferred income annuity: schedules income to begin at a later date.
Questions before purchasing
- How long is the surrender-charge period?
- What withdrawals are permitted without charge?
- Which values and income benefits are guaranteed?
- What optional rider fees apply?
- How is interest credited and when may terms change?
- What happens at death and what does the beneficiary receive?