An Overview of Annuities

Important Things to Know About Annuities


An annuity is a contract between you and an insurance company. You make either a lump-sum payment or a series of payments, and in return, the insurer provides you with periodic payments—starting either right away or at a future date.


Annuities often include features such as:



  • Tax-deferred earnings on your contributions
  • A death benefit for your beneficiary (typically a guaranteed* minimum amount, such as your total purchase payments)


Unlike retirement plans, there is no contribution limit on annuities. However, with so many options available, choosing the right one can be confusing.

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Main Types of Annuities


Fixed Annuity

  • Guarantees a set interest rate during the saving phase
  • Provides steady, predictable income for a set period or for life
  • Treated as insurance products rather than securities


Variable Annuity

  • Lets you choose investment options similar to mutual funds
  • Income depends on how those investments perform
  • Considered securities and overseen by the SEC


Indexed Annuity

  • Combines features of fixed and variable annuities
  • Earnings are tied in part to a market index, such as the S&P 500, but usually include a minimum guaranteed return
  • Depending on its structure, may or may not be treated as a security



What to Think About When Choosing an Annuity


An annuity is a financial product that provides steady income in exchange for a lump sum or ongoing payments, often used to support retirement. Depending on the type—fixed, variable, or indexed—annuities can offer guaranteed returns, growth tied to investments, or a blend of both. They also grow tax-deferred and may include a benefit for your loved ones. Because fees, payout options, and withdrawal rules vary, choosing the right annuity can be complex. Contact us for help exploring your options and finding the best fit for your needs.