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Generally speaking, annuities can be used to refer to the contracts in which there may be a series of premiums that are paid by investors in order to earn a series of payments for income from the insurer. Annuities are usually meant to secure income when the investors have to retire later in their life. To understand more about annuities, it may be wise to get to know the available types of annuity in advance.

The first available type of annuity that is worth consideration is the fixed annuity. With this type of annuity, investors will be able to earn interest at a rate which is set during the period of the annuity accumulation. Yet, during the payment period, the income will refer to a fixed rate. But, one thing that the investors should keep in mind is that by “fixed”, it does not mean that the rate is not changeable any longer. Instead, it means that the contract is the fixed item.

The second type available is the variable annuity. With this type of annuity, the premiums paid by the investors will be stored in a different account. Then, it is up to the investors to determine how they want to invest, in terms or premiums. Most of the variable annuities, however, are invested in the form of mutual funds. There are also accounts meant for bond and stock investments available.

The last type of annuities available is the indexed annuity. With this type of annuity, investors are likely to earn income which is based on the external financial index. S&P 500 may be a good example for this. The annuity credited interest will be based on the formula linking to an underlying index. It is also a common thing for the indexed annuity to have a guarantee in paying the minimum rate of interest and this will make sure that investors are not likely to lose the initial premium investment that they have made at an earlier time.