Annuities, What Seniors Need to Know

4 Kinds of Annuities There are many kinds of annuities. For example, there are: • Different ways to make premium payments. • Different ways that annuities earn interest. • Different ways to start getting income payments. There are different ways to make premium payments. Your payments to buy an annuity are called premiums. • You can buy an annuity with a single premium. • Or you may make a series of premium payments over time. • The money you pay to buy the premium is also called your principal. Annuities earn interest in different ways. Variable Annuity: The insurance company invests your annuity in stocks, bonds, or other investments, based upon the risk you want to take. If the fund does not do well, you may lose some or all of your investment. For more information on variable annuities, read the brochure Variable Annuities: What You Should Know at www.sec.gov/investor/seniors.shtml. Fixed Annuity: Your money earns interest at rates set by the insurance company (or in another way described in the annuity contract). The interest rate may be set for only 1 year or for up to 10 years. An Equity-Indexed Annuity has an interest rate that is usually based on a stock market index. You have a guaranteed minimum interest. The guarantees are conservative. The interest might be higher.