Do you understand the different types of annuity products available to you? Each insurance carrier has different annuity products available to fit into your retirement strategy, but Annuity Alliance recommends talking with a licensed financial professional first.

Financial professionals can compare multiple annuity products, run an illustration to show you potential performance, and provide enough information so you can make an educated decision about what annuity product may align with your plan.

Before talking with a financial professional, Annuity Alliance would like to break down the different annuity types so you understand the basic concepts of each product.

Currently, you can purchase one of three types of annuities – fixed, indexed or variable. Each of these products also has a slight variation (fixed indexed, deferred, immediate) depending on what you want to purchase.

• A fixed annuity allows you to lock in a rate of earning that, even over long periods of time, remains unaffected by market ups and downs. The principal investment and a specified interest rate are both guaranteed.
• An indexed annuity pays a rate of interest based on a particular market index, such as the S&P 500. Indexed annuities give buyers an opportunity to benefit when the financial markets perform well, unlike fixed annuities, which pay a set interest rate regardless.
• A variable annuity is, like other annuities, a long-term investment option that can grow tax-deferred. But its performance is driven by the ups and downs the market may experience.
• A fixed index annuity gives you more growth potential than a fixed annuity along with less risk and less potential return than a variable annuity.
• An immediate annuity is the most basic type of annuity. You make one lump-sum contribution, and it’s converted into an ongoing, guaranteed stream of income for a specified period of time (as few as five years) or for a lifetime. Withdrawals must begin within a year.
• A deferred annuity is a contract with an insurance company that promises to pay the owner a regular income, or a lump sum, at some future date. Deferred annuities differ from immediate annuities, which begin making payments right away.

What annuity would best fit within your retirement plan? Ask Annuity Alliance to provide you with a licensed professional to discuss these annuity options with you.