Aug 2021 – 15 min read
An annuity is a way to help turn a portion of your savings into regular income – for a predetermined fixed period or the rest of your life.
Types of annuities
There are 3 main types of annuities. Before you buy an annuity, it’s important to understand the options, benefits and risks of each.
In addition to these 3 types of annuities, they can also be immediate (they start paying right away) or deferred (they start paying at a future date).
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Benefits
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Provides guaranteed income for as long as you live No risk of outliving your money |
You may die before receiving all the money you put into it Adding options may mean a lower regular payment |
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Provides guaranteed income for a fixed period of time Your named beneficiary or estate receives any remaining money if you die before the end of the term |
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AssurisOpens a new website in a new window, a consumer protection agency, protects annuity policyholders if the annuity provider goes out of business.
- 100% for monthly payments up to $2,000
- 85% for monthly payments over $2,000
Because an annuity is a contract between you and the annuity provider, you usually can’t change the terms, switch to another type or get your money back.
Some annuity contracts may allow you to cancel for a fee within a short window of time after you begin receiving payments.
Now that you know more about annuities, you may want to contact your financial advisor to: