What are the different types of Annuities?

How do you know which one is right for you?

Let's examine...

What is an Annuity?

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An annuity is an insurance contract that can be used to create a stream of income payments to you if/when you decide to begin distributions. 

Prior to beginning distributions, your contract is in the Accumulation phase, in which you can pay into the policy.

Annuities typically accumulate on a tax-deferred basis.

Fixed Annuity

You Get A Certain "Fixed" Rate of Interest For

A Certain Period of Time

Example: 4% Interest for 4 Years

CD Buyers Will Sometimes Incorporate A Fixed Annuity into A Portfolio to Improve Overall Interest Rates 

Fixed Annuities Are Usually Suitable For Retirees Who Do Not Need Exposure to the Market.

Indexed Annuity

You Get to Participate in a Portion of the Gains of the Corresponding Index

Example 1: 90% of the Gains of the S&P 500 up to 12%, which would credit your account with 10.8% for that Year if the S&P 500 Returned 12%.

You Also Get 

A Guaranteed Interest Rate. No Participation in Losses

of the Corresponding Index

Example 2: If the S&P 500 Returned -10%, your Account Would Be Credited

At Least 0% Return,

which Insulates Your Account

from Losses.

Indexed Annuities Are Usually Suitable For Retirees Who Want or Need the Potential for Higher Returns than A Fixed Annuity, but Do Not Want Market Risk.

Variable Annuity

To Put It Simply, With a Variable Annuity, your account is subject to MARKET RISK and LOSSES. 

 1 - Need Income Immediately?

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 2 - Have Time to Let it Grow?

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If you want to start your income stream immediately, you would have to purchase a SINGLE PREMIUM IMMEDIATE ANNUITY. This means you put your money in at the beginning and immediately start receiving income based off your one-time payment. A person will typically do this when they need income immediately and do not have time to let their money grow.

If you want to defer your income stream, you would have to purchase a DEFERRED ANNUITY. This can be funded with a SINGLE PREMIUM and/or MULTIPLE CONTRIBUTIONS over time. A person will do this when they do not need immediate income from the asset, so they can let the asset accumulate over time.

Are There Different Types of Annuities?


Variable Annuities also Often Have High Fees.

At Carrano Insurance Services, We Do Not Offer Variable Annuities, Because Combining High Fees with Market Risk is Usually Not Best For Clients.

Are There Different Ways To Fund An Annuity?


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