The immediate annuity (or pay-out annuity) is purchased with a single premium and provides regular income payments, which often start within 13 months after the premium is paid. The income payments may be for the lifetime of the purchaser, for the joint lifetime of the purchaser and spouse, or for a specified time period. With the lifetime payment options, there may be a guaranteed period during which payments are made to a beneficiary even if the policy owner has died. The pay-out annuity usually does not have a cash value.

The deferred annuity provides for future income needs by providing asset accumulation. There are two periods in the deferred annuity policy: the accumulation period, during which premiums are held in an investment account (the account value), and the pay-out period, when scheduled payments are made to the owner. During the accumulation period the deferred annuity has cash values based on the premiums and investment performance. At the end of accumulation period, the policy owner can choose to receive payouts, or surrender the policy for the account value. There are two types of deferred annuities: fixed annuity and variable annuity.

A fixed annuity has a cash value that grows with interest. A minimum interest rate is guaranteed by the Company, and higher rates of interest may be credited to the account. As long as the policy is not surrendered during  a specified period of time after the annuity is purchased, the policy owner is assured that principal will be returned with interest.

An indexed annuity is a special type of fixed annuity. The interest rate is determined by a published stock market index. This allows the policy owner to participate in equity returns, without the risk of losing principal.

A variable annuity offers a range of investment options during the accumulation period. The cash value will vary depending on the performance of the investment options that the purchaser selects from the options provided by the Company. With a variable annuity, the account value can go down or it may go up, depending on the investment results. During the accumulation period, the owner can transfer money from one investment option to another with some restrictions.

Some versions of the variable deferred annuity provide optional coverages that guarantee against unfavorable long-term investment performance during the accumulation period. These coverages may provide for increased death benefits, guaranteed minimum cash values, guaranteed minimum withdrawal benefits or guaranteed minimum income benefits during the pay-out period. Charges for these coverages are deducted from the cash value.