Learn the basics of retirement income planning and annuities, so you can have an informed conversation with a licensed insurance professional.
This page is intended for educational purposes only. It is not an offer, solicitation, or guarantee of any specific annuity product, rate, bonus, or return. Details about any product will be provided by a licensed insurance professional and are governed by the terms of the specific contract you may apply for.
An annuity is a contract issued by an insurance company that is generally designed to help provide income, often used as part of retirement planning. In exchange for a premium, the insurance company agrees to make payments to you, either immediately or at a future date, depending on the type of contract.
There are several general categories of annuities, and each works differently:
Fixed annuities generally credit interest at a set rate declared by the issuing insurance company.
Fixed indexed annuities generally credit interest based in part on the performance of a market index, subject to caps, participation rates, or other limits set by the issuing carrier, while typically offering protection from direct market losses on the contract value.
Variable annuities involve investment risk and are regulated differently; they are not the focus of this page and are not offered as described here.
Certain annuities may offer the option to convert contract value into a stream of income, including options designed to provide income for life. Some fixed and fixed indexed annuities are also designed to help protect contract value from downturns in the market, depending on the specific contract terms.
Whether an annuity may fit into your retirement plan depends on your individual goals, time horizon, other assets, and risk tolerance. A licensed insurance professional can help you understand whether a particular product may be appropriate for your situation.
All guarantees associated with an annuity, including any income guarantees, are backed by the claims-paying ability of the issuing insurance company — not by a bank, the government, or any other entity.
Withdrawals from an annuity may be subject to surrender charges, taxes, and/or penalties, particularly if taken during an early withdrawal or surrender period or before a certain age.
Caps, participation rates, fees, and other terms vary by product and carrier and can change the amount of interest credited or income received.
Any tax treatment referenced in connection with annuities is general in nature. You should consult a qualified tax professional regarding your individual situation.
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