Annuity / Annuities
Annuity Explanations
What is an Annuity?
An annuity is an agreement between you and a life insurance company. In this agreement, you pay the life insurance company a sum of money. In return, the life insurance company pays you a series of payments.
While this simple definition is correct, it does not accurately describe all forms of annuities available today. Modern annuities come in many different shapes and sizes. In fact, features of an annuity agreement can vary dramatically.
Types of Annuities
The two basic types of annuities are immediate annuities and deferred annuities. An immediate annuity is one in which the payments from the life insurance company begin right away.
A deferred annuity is one in which the cash value of the annuity accumulates over time. With a deferred annuity, payments from the life insurance company do not begin until after an accumulation period.
Both immediate and deferred annuities come in different forms as well. Follow the links below to learn more.
The most common annuities purchased today are:
Single premium immediate annuities (SPIA)
Single premium deferred annuities (SPDA)
Flexible premium deferred annuities (FPDA)
