Annuities: Guaranteed Income You Can’t Outlive
An annuity is an insurance contract. You pay a lump sum or periodic premiums and the insurer provides regular income—often for life.
Overview
What Is an Annuity?
An annuity is a contract between you and an insurance company. You pay a lump sum or series of premiums; in return, the insurer promises regular income payments in the future—often for life.
Annuity = insurance product, not a traditional investment.
Exchange money today for guaranteed payments later.
Designed to help you avoid outliving your savings.
Why It’s Insurance
Annuities insure against longevity risk—the risk of outliving your money. Like life insurance protects against dying too soon, annuities protect against living too long without enough income.
How It Works
Fund the contract. Pay a lump sum or make contributions over time.
Accumulate. Your value grows fixed, indexed, or variable depending on product.
Annuitize or take income. Turn the value into guaranteed payments—often for life.
Optional riders. Add features like lifetime income, long-term care benefits, or death benefits.
Common Annuity Types
Immediate Annuity
Income starts right away, usually within 12 months of purchase—great for retirees needing payments now.
Deferred Annuity
Income begins later. Funds can grow during the deferral period before turning on payments.
Fixed Annuity
Guaranteed interest rate. Focuses on principal protection and predictable growth.
Indexed Annuity
Growth tied to a market index (e.g., S&P 500) with caps/floors; downside protection with limited upside.
Variable Annuity
Invests in subaccounts with market exposure; higher growth potential and risk; fees vary by carrier.
Income Riders
Optional riders can provide lifetime income guarantees, death benefits, or LTC-like features.
Compare Coverage
Who Might Consider an Annuity?
Retirees wanting paycheck-like income for life.
People seeking principal protection with predictable growth.
Those without a pension who want guaranteed income.
Things to Know
Withdrawals before 59½ may face IRS penalties.
Surrender charges can apply early on.
Features, caps, and fees vary by carrier and product.
| Feature | Term Life | Whole Life | Indexed Universal Life | Final Expense Insurance |
|---|---|---|---|---|
| Coverage Length | 10–30 years | Lifetime | Lifetime (flexible) | Lifetime |
| Premiums | Lowest | Fixed, higher | Adjustable | Fixed (generally low face amounts) |
| Cash Value | None | Guaranteed growth | Interest credited (varies by design) | Guaranteed (builds slowly) |
| Best For | Income protection | Legacy & guarantees | Adaptable needs & flexibility | End-of-life costs (funeral, medical, debts) |
Explore Your Annuity Options
Get a personalized income plan comparing fixed, indexed, and immediate annuities from top-rated carriers.
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