"An annuity is a contract between you and an insurance company, under which
you make a lump-sum payment or series of payments. In return, the insurer
agrees to make periodic payments to you beginning immediately or at some future
date. Annuities typically offer tax-deferred growth of earnings and may include a
death benefit that will pay your beneficiary a guaranteed minimum amount, such
as your total purchase payments.
There are generally two types of annuities—fixed and variable. In a fixed annuity,
the insurance company guarantees that you will earn a minimum rate of interest
during the time that your account is growing. The insurance company also
guarantees that the periodic payments will be a guaranteed amount per dollar in
your account. These periodic payments may last for a definite period, such as 20
years, or an indefinite period, such as your lifetime or the lifetime of you and your
spouse.
In a variable annuity, by contrast, you can choose to invest your purchase
payments from among a range of different investment options, typically mutual
funds. The rate of return on your purchase payments, and the amount of the
periodic payments you will eventually receive, will vary depending on the
performance of the investment options you have selected.
An equity-indexed annuity is a special type of annuity. During the accumulation
period – when you make either a lump sum payment or a series of payments – the
insurance company credits you with a return that is based on changes in an
equity index, such as the S&P 500 Composite Stock Price Index. The insurance
company typically guarantees a minimum return. Guaranteed minimum return
rates vary. After the accumulation period, the insurance company will make
periodic payments to you under the terms of your contract, unless you choose to
receive your contract value in a lump sum.
Variable annuities are securities regulated by the SEC. Fixed annuities are not
securities and are not regulated by the SEC. Equity-indexed annuities combine
features of traditional insurance products (guaranteed minimum return) and
traditional securities (return linked to equity markets). Depending on the mix of
features, an equity-indexed annuity may or may not be a security. The typical
equity-indexed annuity is not registered with the SEC."
-sec.gov
you make a lump-sum payment or series of payments. In return, the insurer
agrees to make periodic payments to you beginning immediately or at some future
date. Annuities typically offer tax-deferred growth of earnings and may include a
death benefit that will pay your beneficiary a guaranteed minimum amount, such
as your total purchase payments.
There are generally two types of annuities—fixed and variable. In a fixed annuity,
the insurance company guarantees that you will earn a minimum rate of interest
during the time that your account is growing. The insurance company also
guarantees that the periodic payments will be a guaranteed amount per dollar in
your account. These periodic payments may last for a definite period, such as 20
years, or an indefinite period, such as your lifetime or the lifetime of you and your
spouse.
In a variable annuity, by contrast, you can choose to invest your purchase
payments from among a range of different investment options, typically mutual
funds. The rate of return on your purchase payments, and the amount of the
periodic payments you will eventually receive, will vary depending on the
performance of the investment options you have selected.
An equity-indexed annuity is a special type of annuity. During the accumulation
period – when you make either a lump sum payment or a series of payments – the
insurance company credits you with a return that is based on changes in an
equity index, such as the S&P 500 Composite Stock Price Index. The insurance
company typically guarantees a minimum return. Guaranteed minimum return
rates vary. After the accumulation period, the insurance company will make
periodic payments to you under the terms of your contract, unless you choose to
receive your contract value in a lump sum.
Variable annuities are securities regulated by the SEC. Fixed annuities are not
securities and are not regulated by the SEC. Equity-indexed annuities combine
features of traditional insurance products (guaranteed minimum return) and
traditional securities (return linked to equity markets). Depending on the mix of
features, an equity-indexed annuity may or may not be a security. The typical
equity-indexed annuity is not registered with the SEC."
-sec.gov
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