The tough thing about classifying annuities is that the three common features described in the previous chapter can be mixed and matched to create a bewildering array of options.
For the purpose of simplicity, the following is a list of annuity types at the highest, most basic level. The next chapter provides a full list that includes all of the different permutations.
1) The money goes in “immediately” as a single premium payment.
2) The money can be invested at a guaranteed rate or variable rate.
3) Payments start right away.
1) The money can go in as a single premium payment or a series of payments.
2) The money can be invested at a guaranteed rate or variable rate.
3) Payments are “deferred” to some future date.
1) The money can go in as a single premium payment or a series of payments.
2) The money is invested at a “fixed” or guaranteed rate.
3) Payments are at a fixed rate and can begin immediately or at some future date.
1) The money can go in as a single premium payment or a series of payments.
2) The money is invested at a “variable” or non guaranteed rate.
3) Payments are variable and can begin immediately or at some future date.
1) The money can go in as a single premium payment or a series of payments.
2) The money is invested at a variable rate although there is a guaranteed minimum rate of return that provides a “floor.”
3) Payments begin at a future date and are at a fixed rate that is based on market performance and is supported by the guaranteed minimum rate.
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