Immediate Annuity

• An immediate annuity is one that converts a savings to monthly payments. The annuity guarantees this income. The payments may extend for a set number of years, or for your entire life. If you choose to have payments extend for a set number of years, this is called a temporary annuity. If you die before the payment period ends, a beneficiary will receive the remainder of your annuity payments. If you elect to receive lifetime payments, then the payments stop only when you die, regardless of how long you live.
  
  

Fixed Annuity

• A fixed annuity functions like a savings account. This policy pays a guaranteed interest rate on money you deposit into the annuity. Because of this, you always know, in advance, how much your annuity is worth. This policy may be converted to an immediate annuity in the event you want lifetime payments in lieu of the savings.
  
  

Variable Annuity

• A variable annuity invests your savings into mutual funds. A mutual fund is a collection of stocks, and sometimes bonds, which share a common investment objective. The mutual funds in which you invest determine the annuity's account value. If your funds perform poorly, then your annuity account will lose money. You may end up with far less than a fixed annuity policy over the long term, but your potential gain is much more than what is possible with the fixed annuity.
  
  

Equity-Indexed Annuity

• If you're not ready to risk all of your savings investing in mutual funds, an equity-indexed annuity offers you the opportunity to earn interest based only on the upward movement of the stock market, without losing any money when the market declines. This is not a replacement for investing in the stock market, however. You do not earn dividends in this annuity, and your upside potential may be limited by various earning caps. These caps prevent you from getting all of the upside --- because the insurer takes the risk of loss, it limits your upside potential. The cap on earnings varies by insurer.