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Annuities for Seniors

Annuities are sometimes used as retirement investments. Since there are various types of annuities, it can be difficult to understand the different types of annuities and whether they are right for you.

Annuities are a contract under which an insurance company pays you income at regular intervals in return for a premium or premiums you have paid. Some annuities can pay an income guaranteed as long as you live, which is why they are often marketed as retirement income. Many annuities offer a cash surrender benefit. 

There are many different kinds of annuities and each carries a different level of risk and guarantees. This is one reason it is important to look closely at what you are considering and take your time making a decision. Here is some information on the various kinds of annuities:

    • Immediate Annuities: With an immediate annuity, payments begin immediately upon purchase. This product is for an individual who needs immediate income from his/her annuity.
    • Deferred Annuities: With a deferred annuity, payments begin at some future date that is usually at retirement. With a deferred annuity, you can invest either a lump sum all at once or make periodic payments. The funds grow tax-deferred until you are ready to begin receiving payments.

After deciding which type of annuity is right for you, you need to decide upon the investment type – Fixed or Variable.

    • Fixed: Fixed annuities offer a guaranteed rate of return that is typically over a period of one to 15 years. A popular variation of a fixed annuity is the Equity-Indexed Annuity in which the rate of return is derived using an outside index, such as a stock market index, with a guaranteed floor. 
    • Variable: Variable annuities enable you to invest in a selection of portfolios called sub-accounts. The annuity payments under a variable annuity can increase or decrease depending upon the investment experience of the sub-accounts.

Even if you find an annuity that seems to fit your investment risk level, you still have to ask whether any annuity is right for you. Keep in mind that annuities are to provide income for the long term and should not be bought to reach a short-term financial goal.

Sound advice when considering any financial transaction is to avoid high-pressure sales tactics and to take your time in deciding upon the appropriateness of the transaction. You don’t need to buy anything today or right now. If a deal seems too good to be true, it probably is.

More information on and a list of good questions to ask about annuities is available through the National Association of Insurance Commissioners.

Need More Help?

For more help with annuities or to get answers to your insurance-related questions, visit our Consumer Services Bureau for help!