Annuities are classified in various ways. The following information will help you gain a better understanding of how they are classified.

Method of Premium Payment

Single Premium
A one time only premium payment is made.

Annual Premium
Premium is paid once a year for as many years as it takes to accomplish your financial goal.

Date Benefits Begin

Immediate Annuity
Annuity income begins no later than one year after payment of the premium (usually 30 days).

Deferred Annuity
Annuity income is deferred for a period of time (accumulation period) prior to pay-out (liquidation period). Many deferred annuities are written as savings contracts during the accumulation period. The premiums, accumulated at interest, constitute the cash value and the death benefit prior to the commencement of income payments at some future date. The annuity can be liquidated for its cash surrender value prior to the commencement of the pay-out as an annuity income.

Disposition of Proceeds

No Refund
Annuitant is paid an income for life. No further payments are made to anyone after death.

Guaranteed Minimum Annuities
Annuitant is promised an income for life with guaranteed minimum number of payments. After death, payments are continued to the beneficiary for the remainder, if any, of the guaranteed period. Payments are continued in installments to the beneficiary until combined benefits paid to the annuitant and beneficiary equal a refund of the entire premiums paid.

Number of Lives Covered

Single Life
Annuity covers only one life.

Joint and Last Survivorship
Income is payable throughout the lifetime of the last two survivors, often with a reduction in amount after the first death.

Joint Life
Income is payable throughout the joint lifetime of two people and ceases at either death.

Group Annuity
Annuity income benefits are generated for a group of annuitants or potential annuitants under one single contract. Or a deferred annuity primarily used for accumulation of benefits for a group of potential annuitants is issued to an entity, such as the trustee of a qualified plan.

Pay-out Benefits

Fixed Rate
Guarantees the annuitant a fixed minimum number of dollars for each income payment.

Variable Rate
Expresses the annuity payment in terms of a fixed number of units. The dollar value of which fluctuates periodically according to the investment decisions of the insurer.