An annuity is a contract between a person and an insurance company that requires the insurer to make payments to that party, either immediately or in the future. You buy an annuity by making either a single payment or a series of payments. Similarly, your payout may come either as one lump-sum payment or as a series of payments over time.

 

Types of Annuities

 

• Fixed annuity. This type of annuity pays a minimum rate of interest and a fixed amount of periodic payments. They are regulated by state insurance commissioners. Please check with your state insurance commission about the risks and benefits of fixed annuities and to confirm that your insurance broker is registered to sell insurance in your state.

• Variable annuity. This type of annuity allows you to direct your annuity payments to different investment options, usually mutual funds. Your payout will vary depending on how much you put in, the rate of return on your investments, and expenses. The SEC regulates variable annuities.

• Indexed annuity. This type of annuity combines features of securities and insurance products. The insurance company credits you with a return that is based on a stock market index, such as the Dow Jones or the S&P 500. Indexed annuities are regulated by state insurance commissioners

 

 

How to purchase Annuities:

 

Annuities are usually sold and purchased through insurance companies. Some banks and brokers also sell annuities

 

Fees:

 

Annuities usually have a lot of charges and fees so please ensure that you understand all charges before you invest in an annuity.