Annuities

Understanding Annuity Basics

EXPLORE ANNUITIES

Understanding Annuity Basics

An annuity is a contract between an individual (you, if you decide to buy one) and an insurance company. You contribute a set amount of money, and begin receiving payments after a certain amount of time. Typically, an annuity can allow you to receive payments for the rest of your life.* It’s important to stress that an annuity isn’t an investment; it’s an insurance product.

senior couples hiking through woods annuity basics annuities faragi group delaware

Fixed Indexed Annuity Basics

A fixed indexed annuity (FIA) is an annuity product that protects your money. This is because, while your interest rate may rise in response to the performance of a market index, the value of your FIA will not fall if the market does. Whatever happens in the stock market, the money in your FIA will be safe. *

Annuities and Taxes

Annuities grow tax-deferred.

You only pay taxes on the money in an annuity when it is withdrawn. Depending on your situation, you may be eligible for additional tax benefits. For example, if you received a lump-sum payment from a 401(k), you may be able to transfer that money into an annuity to defer taxes. However, when dealing with such sensitive issues, it's best to consult with a qualified tax advisor.

Scroll to Top