What are the types of annuity available?

Now that we’ve covered the basics of what an annuity is, let’s look at some of the ways that annuity products can differ.

The period of time that your annuity pays out a cash flow can change. Common time periods for annuities include till the rest of your life, a fixed number of years, your life expectancy and the guaranteed period. The guaranteed period option means that if you die within a certain period of time, your nominated beneficiary will receive your remaining payments as an income stream or a lump payment.

Alternatively, some other annuities allow you to nominate a “reversionary beneficiary” who will receive a percentage of your payments instead.

Annuity pay out amounts can also change. Fixed annuities are those that pay out a fixed amount whereas variable annuity cash flows might change depending on the underlying asset’s performance for that period of time. This higher risk option decreases their reliable and consistent nature but means that you can take advantage of higher performing years.