Annuity Topic Guide
Annuity Basics
Learn the core terms: fixed annuity, immediate vs deferred, accumulation phase, payout phase, owner, annuitant, and free-look period.
Key planning points
- Core annuity terminology in plain English
- Immediate versus deferred annuity structure
- How accumulation and payout phases differ
Common questions answered
What is an annuity?
An annuity is an insurance contract used for long-term retirement planning, often focused on tax deferral or income options.
What is a fixed annuity?
A fixed annuity is designed to credit interest under contract terms with principal-protection features tied to insurer claims-paying ability.
How do annuities work?
You fund a contract, then the annuity follows accumulation and payout rules defined by product terms and rider selections.
What is immediate vs deferred annuity timing?
Immediate annuities start income soon after funding; deferred annuities delay payouts while assets remain in a growth phase.
What is the accumulation phase?
The accumulation phase is the period where contract value grows under credited interest or index-linked terms.
What is the payout phase?
The payout phase begins when income distributions are activated under annuitization or rider-based withdrawal provisions.
What is the difference between owner and annuitant?
The owner controls the contract; the annuitant is the measuring life used for certain payout calculations.
What is a free-look period?
The free-look period is a short review window after issue where cancellation rules may allow a refund under state regulations.
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This website provides educational information only and does not provide personalized financial, tax, legal, or Medicare plan advice. Annuity guarantees are backed by the claims-paying ability of the issuing insurance company. Medicare plan availability, costs, and benefits may vary by state, carrier, plan, and personal circumstances. Not connected with or endorsed by the U.S. government or the federal Medicare program.