For Consumers

Types of annuities

There are three different types of annuities:

  • Fixed annuities - Your money - minus any applicable charges - earns interest at rates set by the insurer, as specified in the annuity contract.
  • Variable annuities - The insurer invests your money - minus any applicable charges - in a separate account. The company invests your money in stocks, bonds or other investment funds you choose, based upon how much you're willing to risk.

    If the fund doesn't do well, you may lose some or all of your investment.

    Agents and brokers who sell variable annuities must be registered with the Department of Financial Institutions (
  • Equity-indexed annuities - With this type of annuity (PDF, 280KB), the insurer offers a guaranteed minimum return, plus it offers a variable rate based on the return of a specific index. During the accumulation period, the insurer credits you with a return based on interest earned plus or minus changes in the index, subject to participation rates, caps, charges, and other restrictions.

    The most commonly used index is Standard & Poor’s 500 Composite Stock Price Index (S&P 500) (