Let's start with the basics. An annuity is an insurance contract issued by an insurance company.
An annuity contract has two phases: an accumulation phase and a distribution phase. During the accumulation phase, the contract owner makes a payment or payments into the contract in exchange for either a fixed or a variable rate of return that is not subject to income taxes until withdrawal, permitting the tax-deferred growth of the investment. During the distribution phase, the accumulated value of the annuity contract can be converted into a guaranteed income stream that can last for life or for a set period of time.
Annuities can be a key part of your overall retirement strategy – but they're not right for everyone.
The two most popular types are fairly intuitive: Fixed annuities have a set payout rate, and variable annuities provide a return based on the performance of the underlying investments ("subaccounts"). In addition, income annuities (sometimes referred to as immediate annuities or deferred income annuities, depending on when income payments begin) are a subset of fixed annuities and can provide income for life or for a specific time period. The links below can help explain the different types of annuities we offer.