There are several ways to categorize annuities, and any one annuity may
fit into several categories. Immediate Annuities: With an immediate annuity, the
annuitant pays a single premium and immediately starts receiving payments at the
end of each payment period, which is usually monthly or annually. Deferred Annuities:
With a deferred annuity, the annuitant pays one or more premiums over what is often called
the accumulation period. The premiums paid and the interest credited to the premiums goes into
a fund called an accumulation fund. There may be a minimum guaranteed interest rate at which the
money will accumulate during the accumulation period. Fixed Annuities: A fixed annuity provides
fixed-dollar income payments backed by the guarantees in the contract. The annuitant cannot lose the
investment once the income payments begin. The amount of those payments will not change. With fixed annuities,
the company bears the investment risk. Variable Annuities: Variable annuity investments are securities, and
fluctuate with economic conditions. The value of a variable annuity depends upon the value of the underlying investment
portfolios associated with the annuity. The annuitant bears the investment risk for the value of the security.
The value of the annuity will increase or decrease with the investment performance of the security.