What are Annuities?

Annuities are contracts sold by private insurance companies and the money grows on a taxed deferred basis.  All annuities offer you an income in which you cannot outlive.  Annuities offer an income benefit rider in additional to the tax-free growth.  There are 2 types of annuities in people can purchase, they are deferred and immediate annuities and are thus explained.

3 Types:

Photo Annuities

Fixed Indexed


Fixed annuities are similar to a certificate of deposit sold by banks.  They offer you a guaranteed rate of return within a certain amount of time.  The difference between a fixed annuity and a CD, is that the growth inside your annuity is not subject to income taxation.  In addition to tax advantages, a fixed annuity is more liquid than a CD and avoids probate.

Fixed Indexed:

These annuities combine the safety, liquidity, and guarantees of a fixed annuity but offer contract holders more potential for growth by tying some of the interested that is credited from an index such as the S&P 500.

These annuities do not directly participate in the market but share in some of the gains up to a declared cap.  For example, if the cap on the S&P for one year is 8%, you can get up to the declared cap.  If the S&P does 5% you get 5%.  If the S&P returns 10% you get 8%.

You will never see a loss on your statements from these annuities as your principal is protected and previous years gains are locked in.  No Fees, unless you add an income rider.


Variable products are like mutual funds with an annuity wrapper and these annuities carry risk and you can lose your money.  These products have many fees but also give you more potential for returns.  Our company does not promote these types of annuities because of potential loss of money.


Immediate annuities offer immediate payout of an income stream for a desired period of time.  The payment can commence within 30 days of policy issue or within 1 year of issues.

The payment times can range from 5 years all the way out for life.  Some people choose payments for a period certain while others opt for lifetime payments.

Related Links:

Best Indexed Annuities

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