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What is an annuity?
An annuity is a contract issued by an insurance company. Depending on the contract, it may be designed for accumulation, income, principal protection, or a combination of objectives.
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Learning Center
Understand annuities in plain English.
Learn the key concepts, compare major annuity categories, and prepare better questions before speaking with a licensed financial professional.
Start With the Basics ↓Start here
Build a strong foundation
These guides cover the concepts most consumers encounter when beginning an annuity conversation.
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Growth and protection
Different annuities credit interest in different ways. Some use a declared rate; others use formulas linked to the performance of a market index without direct ownership of that index.
Compare approaches →∞
Retirement income
Some contracts can create an income stream for a chosen period or for life. Income features, withdrawal rules, and guarantees vary by contract.
Prepare your questions →Major categories
Different tools for different priorities
No single annuity category is automatically right for everyone. Goals, time horizon, liquidity needs, risk tolerance, age, state, and contract terms all matter.
View Annuity Types →1
Fixed and multi-year guaranteed annuitiesGenerally credit a declared rate for a stated period, subject to contract terms.
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Fixed indexed annuitiesCredit interest using one or more index-linked formulas while protecting against direct index losses, subject to limitations.
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Registered index-linked annuitiesOffer index-linked growth potential with defined downside exposure; values can decline.
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Income annuitiesConvert premium into a stream of payments that may begin immediately or at a later date.
Before deciding
Questions worth asking
A licensed professional should explain both the potential benefits and the limitations of any specific contract.
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Access to money
How much can I withdraw each year? What surrender charges, market value adjustments, taxes, or penalties could apply?
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Crediting and returns
How is interest calculated? Are there caps, participation rates, spreads, buffers, floors, or other limits that can change?
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Costs and features
Are there explicit fees? What optional riders are included or available, and how do they affect contract value or income?
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Carrier strength
What financial-strength ratings apply to the issuing insurer, and what do those ratings measure—or not measure?
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Income guarantees
How is the benefit base different from cash value? What happens after withdrawals begin, and can income change?
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Alternatives
What other strategies could address the same goal, and why might this contract be preferable—or not preferable—for me?
Quick glossary
Terms you may hear
Select a term for a short, general explanation.
A contractual charge that may apply when more than the permitted amount is withdrawn during a specified period.
The portion of contract value that may generally be withdrawn without a surrender charge, subject to the contract.
A percentage used in certain index-crediting formulas to determine how much of an index's measured gain is used in the interest calculation.
A maximum credited rate for a particular index-crediting period or strategy.
An optional or included contract feature intended to provide specified withdrawal benefits, often subject to separate calculations and conditions.
The issuing insurance company's financial ability to meet its contractual guarantees. Guarantees are not backed by Annuity Index.
Turn your questions into a conversation.
Use our short questionnaire to organize your priorities and, if you choose, schedule a complimentary Zoom meeting with a licensed professional.
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