What are the different types of annuities?

New York Life offers different types of annuities. Use this guide to learn which annuity product fits best with your financial goals.

Dylan Huang

Dylan Huang
SVP, Head of Retirement & Wealth Management Solutions

Active senior woman having discussion with agent about her retirement investment plan

The concept of an annuity has been around since Roman times. During the reign of the emperors, it signified a contract that provided annual payments over time. And in the early days of the United States, deferred payments were used to help develop the government.

The founding father Benjamin Franklin bequeathed sums of money to the state governments of New York and Pennsylvania with deferred payments to be made for decades following his passing. A shrewd thinker, Franklin understood the logic and benefits of spreading out payments over time and establishing a forward-looking strategy.

In our modern times, annuities still do just that: An annuity is a contract between you and an insurance company in which you make a lump-sum payment, or a series of payments, in exchange for regular disbursements, beginning either immediately or at some point in the future.

Depending on how you would like this arrangement to be structured, these retirement income payments could be a set amount ("fixed") or have the potential to grow your income ("variable"). An annuity is the only financial product that can provide you with a guaranteed lifetime income and protect you from outliving your savings. 

Understanding the types of annuities.

There are different types of annuities, and each is designed to address different client needs. For example, do you want income now, or can you hold off on receiving payments until later? Let’s take a closer look at the main types of annuities that may be able to help address concerns, like inflation, disappointing returns on investments, or sequence of returns risks, which can erode your standard of living in retirement.

Variable annuities

If you’re looking for a way for your retirement savings to potentially grow in the stock market and are willing to accept some risk that returns will fluctuate and that there is the possibility of principal loss, variable annuities (VAs) could be the right solution for you.

The value of a variable annuity is based on the performance of an underlying portfolio of investments selected by the annuitant (the annuity owner or the issuing insurance company).

Variable annuities have the advantage of letting you control your portfolio; you choose the sub-accounts into which these investments are placed. Variable annuities provide market exposure that may be needed to potentially grow your retirement nest egg.

Please consider the charges, risks, expenses, and investment objectives carefully before purchasing a variable annuity. The product’s prospectus contains this and other information and can be obtained from a financial professional. Read the prospectus carefully before you invest or send money.

Consider variable annuities for:

  • Access to financial markets.
  • Growth potential through a wide choice of investment options.
  • Legacy protection.

Income annuity

With an income annuity (sometimes known as an immediate annuity), you can receive a “pension-like” payout that helps you maintain the lifestyle you’ve earned. You can receive your guaranteed* payments as early as one month after you’ve finalized the paperwork. For those who like the comfort of knowing exactly how much income they’ll have to spend each month, an income annuity could be a good fit.

Consider income annuities for:

  • Immediate income needs.
  • A worry-free stream of guaranteed income, with an option for dividends. Dividends are not guaranteed.
  • The flexibility to design a customized income stream.

Deferred annuity

As the name implies, a deferred annuity begins disbursing payments at a future date chosen by the annuity owner. If you prefer not to put your money in the market, these types of annuities provide a steadier, more predictable growth approach to your savings. Another benefit is that your premiums grow tax free leading up to the time when you start receiving payouts.

Consider deferred annuities for:

  • Future income needs.
  • A worry-free stream of guaranteed income.
  • The flexibility to design a customized income stream.

Simply put, there are a range of options available to help you achieve your financial goals. Because everyone has different ideas about what they need and are comfortable with when it comes to retirement, talking to a financial professional can help you figure out what’s best for you and your level of desired risk. To learn more about annuities, see Annuities.

Understanding annuities FAQs

Annuities are essentially insurance contracts. You pay a set amount of money today (or over time) in exchange for a lump-sum payment or stream of income in the future. The type of annuity and the details of the annuity can determine the payouts you'll receive.

Annuities can suit a wide range of financial needs. They are not one size fits all. Depending on your retirement goals, annuities may be right for:

  • Retirees looking for a predictable income stream
  • Pre-retirees looking for safer ways to grow their principal
  • People with 10+ years before retirement looking to diversify and grow their nest egg
  • People who wish to maximize the legacy they leave to their beneficiaries

Purchasers of New York Life income annuities can name a beneficiary who will receive the portion of the original purchase price that has not been paid out at the time of death. Additionally, if the annuity is structured as a joint life annuity, it guarantees payments for both the lifetime of the annuitant and that person's spouse. For variable and fixed deferred annuities, the beneficiary receives the account value of the policy, which may be higher than the purchase price (as the money has grown over time).

This is an individual decision. But a sensible time to purchase an immediate, or income, annuity would be around your time of retirement. It will give you an income stream to supplement Social Security and your retirement savings. For a deferred annuity, between the ages of 40 and 70 is typically the ideal range. There is no way around it: For a deferred annuity to work to its maximum capacity, you need to let it sit and accumulate (typically for about 10 years).1

Yes. An annuity provides a guaranteed stream of income that supplements Social Security and retirement savings—and reduces the risk of running out of money in retirement.  Immediate annuities tend to be the best annuities for seniors, because they can begin paying out soon after purchase.

Fixed deferred annuities typically provide the client a guaranteed interest rate that is not tied to the market. In other words, your money always goes up, no matter what. As a tradeoff for this guarantee, your growth potential is usually limited. In addition, you have limited access to your money during the policy term you choose.  Income annuities are also safe from the ups and downs of the market, meaning you receive steady income for life, without worrying about what the market is doing. These products, however, offer very limited access to your principal once purchased.


It is important to note that annuities contain certain fees, risks, limitations and restrictions; please speak with a financial professional for costs and complete details.  Also, withdrawals may be subject to ordinary income taxes and, if made prior to age 59½, may be subject to a 10% IRS penalty; Surrender charges may also apply. 

Want to learn more about the different types of annuities?

A New York Life financial professional can help determine what’s right for you.

About the author

Dylan Huang is senior vice president, Foundational Business Leader, and head of Retirement and Wealth Management Solutions at New York Life. In this role, he is jointly responsible for all aspects of New York Life’s career agency-sold businesses and directly oversees a portfolio of businesses comprised of Retail Annuities, Long-Term Care Solutions, NYLIFE Securities LLC (broker-dealer), and Eagle Strategies LLC (Registered Investment Adviser). In addition, Mr. Huang is a member on various senior management committees, including the Product Approval Committee, Capital Investment Committee, and Operating Expense Committee.

Mr. Huang began his career at New York Life in 2001 and advanced to leadership roles of increasing scope in the company's Life Insurance, Annuities, Agency, and Corporate Finance divisions. He is a recognized thought leader in the retirement industry for product development, patents, and award-winning retirement research and is frequently sought by members of the media for his insights on retirement topics. In 2021, Mr. Huang received the Outstanding 50 Asian Americans in Business Award from the Asian American Business Development Center.

Mr. Huang is a member of The American College's advisory boards for its Center for Retirement Income, which elevates retirement income planning knowledge of financial service professionals to improve retirement security for Americans, and its Granum Center for Financial Security, which strengthens the financial services industry through knowledge and insight that professionals can use to help their clients achieve financial security. He also sits on the board of Virtual Enterprises International, an organization dedicated to providing middle and high school students with immersive business and entrepreneurial experiences.

Mr. Huang is a Fellow of the Society of Actuaries and a member of the American Academy of Actuaries. He holds a Master’s degree from the University of Connecticut and a Bachelor’s degree from the University of British Columbia.

*All guarantees are backed by the claims-paying ability of the issuer.

1Braden MacDonald, “What Is Too Young or Too Old to Purchase an Annuity?” All Things Annuity. AllThingsAnnuity.com

The Guaranteed Future Income Annuity (GFI) is issued by New York Life Insurance and Annuity Corporation, a wholly owned subsidiary of New York Life Insurance Company, 51 Madison Avenue, New York, NY 10010.  All guarantees are dependent on the claims-paying ability of New York Life Insurance and Annuity Corporation (NYLIAC). Available in jurisdictions where approved.

For most jurisdictions, the policy form number for the New York Life Guaranteed Future Income Annuity is ICC11-P100.  It may be 211-P100, and state variations apply.

The Future Mutual Income Annuity is issued by New York Life Insurance Company, 51 Madison Avenue, New York, NY 10010.  All guarantees are dependent on the claims-paying ability of the issuer. Available in jurisdictions where approved. 

The policy form number for the New York Lifetime Mutual Income Annuity is 214-P200. The policy form number for the New York Future Mutual Income Annuity is 215-P200. State variations may apply.

In most jurisdictions, the policy form number for the Premier Variable Annuity II is ICC15-P301, or it may be 215-P301. State variations may apply.

SMRU 1872753

New York Life Variable Annuities are issued by New York Life Insurance and Annuity Corporation (NYLIAC) (A Delaware Corporation) and offered by properly licensed Registered Representatives of NYLIFE Securities LLC (Member FINRA/SIPC), A Licensed Insurance Agency. NYLIAC and NYLIFE Securities LLC are wholly owned subsidiaries of New York Life Insurance Company, 51 Madison Avenue, New York, NY  10010