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Understanding Annuities

Radio Transcript, 60 seconds, for use during week of Nov. 5.

This is an Invest Wisely minute brought to you by Iowa State University Extension.

One investment option is an annuity.  This is a contract between you and an insurance company.  In exchange for a lump sum or series of payments, the insurance company agrees to make regular payments back to you for a fixed period of time or for the life of you or you and your beneficiary.

Payments can begin immediately or at a specified future date. There are three types of annuities – fixed, variable, and equity-indexed.  Always ask your insurance agent to explain your options in detail.  Review possible contracts and compare information for similar contracts.

Invest Wisely comes from Iowa State University Extension through a grant from the Investor Protection Trust providing investor education on the web at investorprotection.org.

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Updated November 12, 2007