Annuities: Types and Features

Equity indexed annuities

Annuities where the equity is tied to an index such as the S&P 500

Life annuity

Annuity settlement that stops when the annuitant dies

Flexible Premium annuity

Annuity that allows for flexible payments

Immediate annuity

Annuity that begins paying one month after it is purchased

Single premium immediate annuity

Annuity that begins paying one month after it is purchased with a single premium

Fixed annuity

Annuity that guarantees a minimum rate of return

Joint and Survivor Annuity

Annuity that is best suited for a retired couple seeking income for as long as either lives

Deferred annuity

Annuity that is purchased to provide guaranteed income after retirement

Variable annuity

Annuity that is purchased with an inherited large amount of money

Level premium deferred annuity

Annuity that is purchased with level premium payments and begins paying after a certain period

Refund annuity

Annuity that pays a lump sum payment to the beneficiary if the annuitant dies after the annuity income begins

Life Annuity with Period Certain

Annuity that pays a specified number of years whether the annuitant is alive or dead

Life income annuity

Annuity where the benefit payment amount is influenced by various factors

Tax consequences

Consequences of surrendering a nonqualified individual fixed annuity prior to age 59 1/2

Immediate annuity contract

Contract that systematically liquidates both principal and interest

Deferred annuity contract

Contract where annuity payments are based on the annuitant's life expectancy

Surrender charges

Included in an annuity contract to discourage early termination

Flexible payments

Payment method that can be used to purchase annuities

Level payments

Payment method that can be used to purchase annuities

Single lump-sum payment

Payment method that cannot be used to purchase annuities

Straight life payout option

Payout option that provides the largest monthly check in a single premium, immediate annuity

Annuitant

Person whose life the annuity income amount is based on in an immediate annuity

Fixed Period

Settlement option that pays a specific amount to the annuitant with no residual value payable to a beneficiary

Minimum Interest Rate

The minimum rate of return a fixed annuity earns

Annuity period

Time when a policyowner contributes to an annuity