Indexed annuities
While not a direct investment in the stock market, offer investment growth through returns tied to the performance of market indices, such as the S&P 500, over a variety of time-horizons. Fixed indexed annuities provide 100% principal protection from the insurance company. To offset this protection, gains tied to the annuity are capped, so growth may be less than the actual market gains achieved by the index. Fixed indexed annuities may also offer optional lifetime income benefits for retirement income.
Income annuities
This type of annuity goes directly into the distribution phase. There is no accumulation phase. Income annuities offer owners a choice of income options in exchange for the premium payment.
Deferred annuities
This type of annuity begins in the accumulation phase. The owner pays premiums into the annuity and chooses from the available investment options. During this phase, earnings typically accumulate on a tax-deferred basis. The owner has the flexibility to start the distribution, or income, phase at a later date, often coinciding with a retirement date.