Types of Fixed Annuities
The basic types of deferred fixed annuities can be broken down into the following categories. They are:
Book value deferred annuity products earn a fixed rate for a guaranteed period. The surrender value is based on the annuity’s purchase value plus a credited interest, net of any charges. Book value products are the predominant fixed annuity type sold in banks.
Market value adjusted annuities are similar to book value deferred annuities but the surrender value is subject to a market value adjustment based on interest rate changes.
Index annuities guarantee that a certain rate of interest will be credited to premiums paid but also provide additional credited amount based on the performance of a specified market index (such as the S&P 500®).
Types of immediate (fixed income) annuities:
Structured settlement annuities are used to provide ongoing payments to an injured party in a lawsuit.
Single premium immediate annuities (SPIAs) are usually purchased with a lump sum and payments begin immediately (usually within 30 days) or within one year after the annuity is purchased.