Annuities
Understanding annuities
What is an annuity?
An annuity is a contract between you and an insurance company. You make a payment (or a series of payments), and the insurer agrees to make income payments to you, beginning either immediately or at a later date. How an annuity works depends on its type and the specific terms of the contract.
Common types of annuities
Immediate annuities
Income payments typically begin soon after a lump-sum payment is made.
Deferred annuities
Income payments begin at a later date you choose, allowing the contract value to potentially grow during the deferral period.
Fixed vs. variable
Fixed annuities offer a stated rate, while variable annuities can fluctuate based on the performance of investment options. Features and protections differ between contracts and are not the same for every annuity.
Important: Annuities are not the same for everyone. Features, fees, surrender charges, and protections vary by contract and insurer. This information is educational and does not promise any investment return or guarantee of performance. Consider whether an annuity fits your goals, and review the contract terms carefully.
Things to consider
Think about when you need income, how long you may need it, the fees and charges within the contract, the financial strength of the insurer, and how an annuity fits with the rest of your retirement plan. Annuities are one tool among many and may not be appropriate for every situation.
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