Is a contract between your client and an insurance company, under which your client make a lump-sum payment or series of payments.  In return, the insurer agrees to make periodic payments to you beginning immediately or at some future date.  Annuities typically offer tax-deferred growth of earnings and may include a death benefit that will pay your beneficiary a guaranteed minimum amount, such as your total purchase payments.  There are generally two types of annuities—fixed and variable.

Fixed Annuity

In a fixed annuity, the insurance company guarantees that you will earn a minimum rate of interest during the time that your account is growing.  The insurance company also guarantees that the periodic payments will be a guaranteed amount per dollar in your account.  These periodic payments may last for a definite period, such as 20 years, or an indefinite period, such as your lifetime or the lifetime of you and your spouse.

Equity Indexed Annuity

Equity Indexed annuity is a special type of annuity.  During the accumulation period – when you make either a lump sum payment or a series of payments – the insurance company credits you with a return that is based on changes in an equity index, such as the S&P 500 Composite Stock Price Index.  The insurance company typically guarantees a minimum return.  Guaranteed minimum return rates vary.  After the accumulation period, the insurance company will make periodic payments to you under the terms of your contract, unless you choose to receive your contract value in a lump sum.

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