Key Points

  • An annuity pays income in retirement, can provide a guaranteed death benefit and generally provides tax deferral
  • The four types of annuities - variable, fixed index, fixed, and immediate - are designed to meet different income needs

An annuity is a long-term insurance product. Many people purchase an annuity to provide a combination of protection through death benefit(s), tax deferral and income in retirement.

Why annuities?

An annuity can provide you with lifetime income or a lump sum, depending on the type of annuity you purchase. An annuity is generally a tax-deferred vehicle. 

Each of the four annuity types offers unique benefits for individual retirement income needs:

  • Variable annuities offer the potential for greater income based on market performance. Variable annuities are complex investment vehicles that are subject to market risk, including the potential loss of principal invested.
  • Fixed index annuities credit interest based on the performance of indexes using a cap or spread.
  • Fixed annuities provide a guaranteed principal* and guaranteed interest, plus generally are tax deferred. 
  • Immediate annuities provide a specific amount of income for the rest of your life or for a specified length of time.

All guarantees are subject to the claims-paying ability of the issuing company. These guarantees do not apply to the investments in variable annuities, which will vary with market conditions.