What kind of annuities are there

An immediate annuity SPIA is an insurance contract with no cash value. A contract owner exchanges a lump sum of money with an insurance company for an immediate, irrevocable series of annuity payments guaranteed for the specified period of the contract. This is what the lottery uses for their payout option. A variable annuity is a tax-deferred investment product for retirement planning that allows you to participate in investments, including stocks, bonds, and mutual funds.

You can lose money in a variable annuity. Fixed indexed annuities are a type of fixed annuity that earns interest based on changes in a market index, which measures how the market or part of the market performs.

Your tax-sheltered retirement accounts get the opportunity to earn market gains with no downside potential and tax deferral. A fixed annuity provides a fixed guaranteed interest for the contract term, similar to a Certificate of Deposit CD.

Your retirement savings earn a fixed guaranteed amount of interest annually for a fixed period of time. A long-term care annuity is a tax-deferred fixed contract that provides an enhanced tax-free benefit to supplement qualified long-term care services and facilities.

Deferred Income Annuities DIA is an income contract in which a consumer exchanges a lump sum of money upfront today for a deferred, irrevocable retirement income stream over a fixed period of time or lifetime in the future.

A two-tier annuity is a tax-deferred FIA contract where you invest money upfront, grow your investment during the accumulation period, and annuitize your future contract values into an irrevocable guaranteed income stream. Annuitization is required.

A Structured Settlement is a structured, irrevocable series of periodic payments from an insurance company commonly court-ordered similar to a SPIA.

A secondary market annuity resells an annuitized distribution guaranteed income stream payments in exchange for a lump sum now. A charitable gift annuity is a transfer by a donor to a charitable organization. Equity-indexed annuities. Immediate annuities. Longevity annuities. NEXT: Are there tax benefits to annuities? Millennials squeezed out of buying a home. Many annuity buyers are uncomfortable at this possibility, so they add a guaranteed period—essentially a fixed period annuity—to their lifetime annuity.

With this combination, if you die before the fixed period ends, the income continues to your beneficiaries until the end of that period. A qualified annuity is one used to invest and disburse money in a tax-favored retirement plan, such as an IRA or Keogh plan or plans governed by Internal Revenue Code sections, k , b , or All other tax provisions that apply to nonqualified annuities also apply to qualified annuities.

Investment earnings of all annuities, qualified and non-qualified, are tax-deferred until they are withdrawn; at that point they are treated as taxable income regardless of whether they came from selling capital at a gain or from dividends. A single premium annuity is an annuity funded by a single payment. The payment might be invested for growth for a long period of time—a single premium deferred annuity—or invested for a short time, after which payout begins—a single premium immediate annuity.

Single premium annuities are often funded by rollovers or from the sale of an appreciated asset. A flexible premium annuity is an annuity that is intended to be funded by a series of payments.

Flexible premium annuities are only deferred annuities; that is, they are designed to have a significant period of payments into the annuity plus investment growth before any money is withdrawn from them.

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