What Is an Annuity?

An annuity is an insurance product designed to help you grow, protect or turn your savings into income. Depending on the type of annuity, it may offer tax-deferred growth, protection from market losses or guaranteed income you cannot outlive.

For many people, annuities can be one piece of a broader financial strategy — especially when planning for reliable income and greater financial confidence in the years ahead.

How Do Annuities Work?

Most annuities have two basic stages:

• Accumulation: Your money has the opportunity to grow within the contract.
• Income: You may take withdrawals or convert your accumulated value into an income stream.

Some annuities also offer optional income benefits designed to provide guaranteed lifetime income.

Because annuities come in many forms, the right choice depends on your goals, timeline and comfort with risk.

Types of Annuities

Fixed Annuities

Fixed annuities provide a declared interest rate and protection from market losses. Some, known as Multi-Year Guaranteed Annuities (MYGAs), guarantee a specific rate for a set number of years.

May be appropriate for: Clients seeking predictable growth and principal protection.

Fixed Indexed Annuities

Fixed indexed annuities earn interest based in part on the performance of a market index, such as the S&P 500®. Your money is not invested directly in the market, and negative index performance does not directly reduce your contract value due to market loss.

May be appropriate for: Clients looking for growth potential with downside protection.

Single-Premium Immediate Annuities

A SPIA converts a lump sum into a stream of income that typically begins within one year of purchase.

May be appropriate for: Clients who want to turn savings into dependable income right away.

Deferred Income Annuities

A deferred income annuity allows you to purchase future income today and delay payments until a later date.

May be appropriate for: Clients who want to create guaranteed income for later in life.

Variable Annuities

Variable annuities offer investment options whose values can rise or fall with market performance. Because they involve securities and market risk, they differ significantly from fixed and fixed indexed annuities.

Creating Income You Can Count On

Certain annuities offer lifetime income features that can provide income for as long as you live. These benefits may involve additional costs and vary by product, so it is important to understand how the income feature works before choosing a contract.

Is an Annuity Right for You?

There is no single annuity that is right for everyone. The best option depends on what you want your money to accomplish — whether that is growth, protection, income or a combination of all three.

Our team can help you understand your options and determine whether an annuity may have a place in your overall financial plan.