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.

Immediate Annuity

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.

Deferred Annuity

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.

Fixed Annuity

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.

Variable Annuity

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.

Fixed Indexed Annuity

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.