Annuities come in two categories. Either to grow money tax deferred or to distribute money over a specific number of years, possibly a lifetime. Unlike other retirement vehicles there is no limit on the amount of money that can be deposited into an annuity each year.

Death Benefit: Some growth annuities feature a death benefit. How does this work? For example say you put $100,000 in a variable annuity. Two years later the annuity is worth $60,000 because the stock market went down. If you died when the annuity is at the lower value your beneficiary would receive the original deposit or $100,000. If the annuity went up in value your beneficiary would receive the greater amount.

Growth Annuities have 2 types.

Fixed Annuities pay a fixed rate of interest, guaranteed, over a certain amount of time. The money grows tax deferred.

Variable Annuities offer a choice of mutual funds that the money can be invested in. Of course, this would subject the money to stock market risk.The money grows tax deferred.

Immediate Annuities pay out a a stream of income over a period of time.The time frame could be 5, 10, 15,or 20 years or over a lifetime. This income can be paid monthly, quarterly, semi-annually or annually. The money left in the annuity grows tax deferred.