Annuities can be classified in a number of ways.
According to when annuity payments begin:
Immediate Annuities

* The insurance company immediately begins payments for life or for a specified amount of time in exchange for your one-time contribution.
* Regular payments can be received on a monthly, quarterly, semiannual or annual basis.
* A portion of each payment represents taxable interest, and the other portion is a tax-free return of your principal.

Deferred Annuities

* Can be funded through a single premium or through flexible payments over time.
* Can potentially help you to accumulate money for retirement, especially over an extended period of time.
* Your money grows tax deferred, which means you pay no taxes on earnings until you withdraw your money.

According to the method of premium payment:
Single Premium Annuities

* Can provide you with a way to turn a large sum of cash into guaranteed income.
* For those who have cash from an inheritance, legal settlement, business sale, etc., can fund an immediate or a deferred annuity.
* For those nearing retirement, who have assets accumulated in a retirement plan or other savings vehicle, can fund an immediate or a deferred annuity.

Flexible Premium Annuities

* Funded over a period of time, generally years.
* Allow you to pay premiums of differing amounts (within a stated minimum and maximum) on a set schedule or randomly.
* Your assets accumulate on a tax-deferred basis.
* Can fund either fixed or variable deferred annuities.

According to where assets are invested:
Fixed Annuities

* Guarantee you a specified rate of interest for a specified amount of time.
* Offer preservation of your assets and protection from market volatility.

Variable Annuities

* Provide you with a greater opportunity for asset growth through a variety of investment choices.
* With their greater opportunity for growth, comes greater risk.