Types of Annuities
With fixed annuities, the principal investment and earnings are both guaranteed and fixed payments are made for the term of the contract.
With a variable annuity, you choose investments and earn returns based on how those investments perform. You can chose investments that offer different levels of risk and potential growth, depending on your investment goals and tolerance for risk.
This special class of annuities yield returns on contributions based on a specified equity-based index, such as the S&P 500. Indexed annuity contracts also offer a specified minimum which the contract value will not fall below, regardless of index performance. After a period of time, the insurance company will make payments to you under the terms of your contract. A fixed indexed annuity is not a stock market investment and does not directly participate in any stock or equity investment.
An immediate annuity is usually purchased with a lump-sum and guaranteed income starts almost immediately. Your investment converts into a guaranteed stream of income that is irrevocable once payments begin. In some situation, funds can be accessed, but some restrictions apply.