IMMEDIATE ANNUITY: An irrevocable decision is made immediately as to when income will begin, under which income option, and the frequency of receiving payments.

DEFERRED ANNUITY: The decision on selecting an income option, beginning date and frequency of receiving payments is deferred to the future. Some of the income options are:

1)      Interest only

2)      Fixed Period Certain- No life contingency

3)      Fixed Period Certain- With life contingency

4)      Life only- With NO period certain.

Types of Annuities by Registration Requirements:

VARIABLE:

The value of the annuity is variable and can be compared to a mutual fund with multiple investment options. The appreciation or depreciation of this type is totally dependent on market conditions.

The contract owner accepts all investment risks inherent in this type of annuity. It is possible to lose principal in a variable annuity.

FIXED:

The principal is fixed and is guaranteed not to vary in value due to market conditions. It will increase in value as interest earnings accumulate.

The insurance company accepts all investment risks in fixed annuities and guarantees the safety of the principal and earned interest credited to the contract owner.

INDEXED:
This type of annuity combines the basic elements of both fixed and variable annuities.

The annuity interest earnings are variable because they are linked to a percentage of the increase in an index (S&P 500, DJIA, NASDAQ)

This percentage is called the Participation Rate and may be guaranteed for the term of the annuity or adjusted each year. The principal is fixed because the annuity offers a 100% money back guarantee at the end of each term.

If the investment such as the S&P 500 goes up, so do interest earnings subject to the contract restrictions.

Caps and fees may be guaranteed for the entire penalty period or may be declared annually. Some contracts may also include a max. or min. percentage for the caps or fees applied during the contract.

If the market declines, the insurance company guarantees the principal and the contract owner accepts the risk of an unknown interest yield based on the growth or decline of the index.