Types of Annuities
There are six main types of annuities: fixed (MYGA), fixed index, immediate (SPIA), deferred, variable, and registered index-linked (RILA). They differ in how your money grows and when the annuity starts paying you.
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What are the types of annuities?
Annuities differ in two ways. The first is how your money grows: at a fixed rate, linked to a market index, or invested in the market. The second is when it pays: right away or at a later date you choose.
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Fixed annuity (MYGA)
Best for: guaranteed growth, like a CD.
- GrowthA fixed rate locked in for 2 to 10 years.
- RiskNo market risk. Principal and rate are guaranteed by the insurer.
- AccessLimited free withdrawals each year. Surrender charges apply if you leave early.
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Fixed index annuity (FIA)
Best for: market-linked growth with a 0% floor.
- GrowthInterest tied to an index such as the S&P 500, up to a cap.
- RiskNo loss from market drops. Credited gains are locked in.
- AccessLimited free withdrawals during the surrender period.
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Immediate annuity (SPIA)
Best for: income starting within a year.
- GrowthNone. It turns a lump sum into a paycheck.
- RiskPayments are guaranteed by the insurer for life or a set period.
- AccessThe lump sum is generally not available after purchase.
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Deferred annuity / deferred income
Best for: growing now and taking income later.
- GrowthTax-deferred. Can be fixed, index-linked or variable.
- RiskDepends on how it grows. Fixed and index types protect principal.
- AccessIncome starts on a future date. Surrender charges apply in early years.
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Variable annuity
Best for: market investing, with no principal floor.
- GrowthInvested in subaccounts, similar to mutual funds.
- RiskYou can lose principal when the market falls.
- AccessWithdrawals allowed. Surrender charges and higher fees apply.
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Registered index-linked annuity (RILA)
Best for: more upside, with a limited downside buffer.
- GrowthIndex-linked, with higher caps than a fixed index annuity.
- RiskA buffer or floor limits losses. You can still lose money.
- AccessSurrender charges apply in early years.
Types of annuities compared
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| Type | How it grows | Risk to principal | When income starts | Typical fees | Best for |
|---|---|---|---|---|---|
| Fixed (MYGA) | Fixed rate for a set term | None | Later, or take it as a lump sum | Usually none. Surrender charges if you leave early. | Guaranteed growth like a CD |
| Fixed index (FIA) | Linked to a market index, up to a cap | None from the market. 0% floor. | Later, often through an income rider | Usually none. Optional riders cost extra. | Upside with no market loss |
| Immediate (SPIA) | Does not grow. Converts savings to income. | None. Payments are guaranteed. | Within 12 months | None stated. Built into the payout. | Income now, for life |
| Deferred / deferred income | Fixed, index-linked or variable, tax-deferred | Depends on the growth type | A future date you choose | Depends on the growth type | Planned income later |
| Variable | Invested in market subaccounts | Yes. Can lose principal. | Later, or through a rider | Highest. Fund, insurance and rider fees. | Market investing, tax-deferred |
| RILA | Linked to an index, higher caps | Partial. A buffer limits losses. | Later | Often low. Some have annual fees. | More upside, some downside |
Which type of annuity fits you?
Pick the goal that sounds most like you.
Your match
Fixed annuity (MYGA)
A MYGA pays a guaranteed rate for a set number of years. Your principal does not move with the market. It works much like a CD issued by an insurance company.
Top MYGA rate today: 7.10% (7-Year MYGA · Simple Interest)
Rates subject to change. Guarantees are backed by the financial strength and claims-paying ability of the issuing insurance company.
Your match
Immediate annuity (SPIA) or an income rider
A SPIA turns a lump sum into a monthly paycheck that can last for life. If you want income later, an income rider on a fixed index annuity can lock in a future payout. Both are guaranteed by the insurer.
Your match
Fixed index annuity (FIA)
An FIA credits interest when its index goes up, up to a cap or participation rate. When the index goes down, you are credited 0% and keep what you have. Gains you have already earned are locked in.
Next step
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Annuity types by how they grow
- Fixed. The insurer pays a set interest rate for a set term. You know your ending balance on day one.
- Index-linked. Interest is based on a market index such as the S&P 500. Fixed index annuities have a 0% floor, while RILAs trade a limited loss buffer for higher caps.
- Variable. Your money is invested in subaccounts that rise and fall with the market. There is no floor on losses unless you buy a rider.
Annuity types by when they pay
- Immediate. Payments start within 12 months of buying. Most people use them to cover monthly bills in retirement.
- Deferred. A deferred annuity grows tax-deferred first and pays later. You choose when to start income or take the money as a lump sum.
Qualified vs. non-qualified annuities
- Qualified. A qualified annuity is bought with pre-tax money, such as an IRA or 401(k) rollover. Withdrawals are taxed as income, and required minimum distributions apply.
- Non-qualified. A non-qualified annuity is bought with after-tax savings. Only the earnings are taxed when you withdraw them.
What is the best type of annuity?
No single annuity is best for everyone. The right choice depends on your goal, your timeline and how much access to your money you need. Most savers narrow it down by deciding first between safe growth, market-linked growth or income, then comparing quotes across the types of annuities that fit.
Compare guaranteed rates across all types of annuities from 90+ companies.
Frequently asked questions
How many types of annuities are there?
There are six main types of annuities: fixed (MYGA), fixed index, immediate (SPIA), deferred, variable, and registered index-linked (RILA). Each one is a mix of how your money grows and when it pays.
What is the safest type of annuity?
A fixed annuity (MYGA) is generally the safest type. Your rate and principal are guaranteed by the insurance company for the full term. Your balance does not move with the market.
Which annuity type pays the most income?
For income that starts now, an immediate annuity (SPIA) usually pays the most per dollar. A deferred income annuity can pay more if you wait longer to start. Your age, sex and the carrier also change the payout.
Can you lose money in an annuity?
Fixed and fixed index annuities do not lose value from market drops. Variable annuities and RILAs can lose principal. Any annuity can cost you money if you withdraw more than the free amount during the surrender period.
What is the difference between a fixed and a fixed index annuity?
A fixed annuity pays a set rate you know on day one. A fixed index annuity credits interest based on a market index, up to a cap or participation rate. It has a 0% floor, so you never lose credited value to the market.
Are annuities FDIC insured?
No. Annuities are backed by the claims-paying ability of the insurance company that issues them. Each state also has a guaranty association that protects annuity owners up to a set limit.
Sources
- NAIC: Annuities consumer guide
- FINRA: Annuities
- SEC Investor.gov: Annuities
- IRS Publication 575: Pension and Annuity Income
Annuities are insurance products, not bank deposits, and are not FDIC insured. Guarantees are backed by the financial strength and claims-paying ability of the issuing insurance company.
