The Three Types of Annuities

                           

There are three types of annuities:

           

One: A Fixed annuity. You get a guaranteed rate of payment and return for a set period.  Rates will never drop below what’s guaranteed. You won't lose funds. However, you lose the potential for earnings growth. Inflation is a decided risk when you are assured fixed income.

                           

Two: A Variable annuity. Funds are invested  similarly to mutual funds. You anticipate substantial gains but fund values can fall. You'll pay relatively high management fees. Moreover,, your beneficiaries will pay taxes on any earnings accumulated during your lifetime. If not in an annuity, such gains are unrealized and tax-free  capital gains.

                       

Three: An Equity-indexed annuity. You get a set rate and fixed payments but  more opportunity for growth. The annuity is tied to an index such as the S & P 500. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)