Variable Deferred Annuities*

A variable annuity is a contract between you and an insurance company, under which you make a lump-sum payment or series of payments.  In return, the insurer agrees to make periodic payments to you beginning immediately or at some future date.  You can choose to invest your purchase payments in a range of investment options, which are typically mutual funds.  The value of your account in a variable annuity will vary, depending on the performance of the investment options you have chosen.

Variable annuities also offer many of the features of other types of annuities.  These include:

1.  Tax deferral on earnings;

2.  A death benefit that will pay to your beneficiary either your account value or the greater of your account value and a minimum amount, such as your total purchase payments and;

3.  The option of receiving a stream of periodic payments for either a definite period such as 20 years, or for an indefinite period such as your lifetime or the life of your spouse.

Variable annuities also often offer optional living benefit features that provide certain protections for payouts, withdrawals or account values, against the effect of investment loses and/or unexpected longevity.

A deferred annuity can be either variable or fixed.


Immediate Annuity

Annuity income is income that a life insurance company pays for a specified number of years. An annuity is not a life insurance policy; it pays out income while you’re alive rather than after you die. If you die before the payout begins or ends, your beneficiary will receive what you paid into the plan–in effect, a death benefit.

Income from an annuity is used to provide financial protection against the risk of outliving your income.  Annuity income payments are made over a period of time, and you can choose to have them disbursed monthly, annually or at your discretion.
An immediate annuity is different from a deferred annuity because there is no accumulation period.  You simply make one or more payments to the insurance company in exchange for the promise of lifetime income payments immediately.
Fixed Annuities

A tax-deferred annuity that guarantees you will earn stated or declared rates of return during the savings phase. When you convert this money into income payments, you will receive a fixed amount of income on a regular schedule. You may also generally be able to receive a lump sum at retirement in lieu of income payments.

Fixed annuities typically offer more safety and predictibility than a variable contract.  With a fixed annuity you know how much you’ll earn and for how long you’ll receive the interest rate.  Your principal is guaranteed by the insurance company as well.