Annuities can be grouped in several ways. Some labels describe how contract value or interest may change. Others describe when income begins or what kind of money funds the contract.
A contract can belong to more than one group at the same time. A fixed annuity can be deferred or immediate. A fixed indexed annuity can use qualified or nonqualified money. The labels are layered. They are not one list of choices that all compete.
If you need the basic definition first, read what an annuity is and how an annuity contract works. This guide focuses on the label system and where to find more detail.
Types of Annuities: The Short Answer
The main growth types are fixed, fixed indexed, variable, and RILA. These labels describe how interest or contract value may change.
Immediate and deferred describe when income begins. Qualified and nonqualified describe the funding and tax status of the money. Income labels such as life only or joint and survivor describe how a payout election works.
Key idea: one annuity can carry a label from each group. “Nonqualified deferred fixed indexed annuity” describes funding, timing, and the crediting method in one phrase.
The 3 Main Ways Annuities Are Classified
Start by asking what the label is trying to classify. This prevents comparisons that mix different questions.
| What are you grouping? | Main labels | What the labels answer |
|---|---|---|
| How value or interest changes | Fixed, fixed indexed, variable, RILA | How growth, interest, or investment performance is determined. |
| When income begins | Immediate, deferred | Whether payments start soon or later. |
| How money is funded and taxed | Qualified, nonqualified | Whether the money is tied to a tax-qualified retirement account or plan. |
These groups overlap. “Deferred” is not a growth method. “Qualified” is not an investment strategy. A fixed annuity may start income right away, and an indexed annuity may hold retirement-account money.
Annuity Types Based on How Value Changes
This first group explains how value may change during a growth period. A fixed contract credits interest under insurer-set terms. A fixed indexed contract uses an index-linked formula. A variable contract changes with selected investment options. A RILA links returns to a benchmark and permits set losses.
Each type has its own risk, return, fee, and disclosure features. A product name alone is not enough. The contract controls the terms. Other disclosure documents and a prospectus may also apply.
Fixed Annuities
A fixed annuity is an insurance contract. The insurer sets or guarantees interest under its terms. This type may appeal when steady interest matters more than direct participation in market gains.
The contract may be deferred or immediate. A multi-year guaranteed annuity, often called a MYGA, is a deferred fixed subtype. It has a stated rate guarantee for a set number of years. It is not a bank certificate of deposit. It is not FDIC-insured. Its guarantees depend on the issuing insurer’s claims-paying ability.
Rates, renewal terms, access rules, surrender charges, and income choices still vary. Read the dedicated Fixed Annuity guide for those mechanics. The Annuity vs. CD guide explains why the two products should not be treated as interchangeable.
Fixed Indexed Annuities
A fixed indexed annuity, or FIA, is an insurance contract. Interest may be calculated in part from changes in an external market index. The owner does not directly own the index or its securities.
The formula may use caps, participation rates, spreads, crediting periods, or other limits. Positive index performance does not mean the contract receives the full raw index return. Under an applicable 0% index-credit floor, a negative index result may produce 0% indexed interest rather than a negative index credit.
The index is a measuring tool, not an account that holds shares. Contract terms set when interest is measured and added. Some terms may change on renewal when the contract allows.
That floor does not remove every risk or reduction. Withdrawals, surrender charges, market value adjustments, rider fees, taxes, inflation, and insurer risk can still affect value or proceeds. FIAs are long-term contracts. See how fixed indexed annuities work for the detailed crediting rules and contract tradeoffs.
Variable Annuities
A variable annuity is both an insurance contract and a security. The owner selects from investment options offered inside the contract. These options often resemble mutual funds. Their performance can raise or lower the contract value.
Direct investment-market losses are possible. This differs from a fixed annuity’s interest structure. It also differs from the index-credit floor used by many FIAs. A variable annuity is not simply a more aggressive FIA.
Variable contracts may include income choices, death benefits, or optional riders. Base-contract costs, fund costs, rider costs, surrender terms, and prospectus details all matter. Features vary. Review the securities disclosures.
Registered Index-Linked Annuities (RILAs)
RILA stands for registered index-linked annuity. A RILA is an insurance contract and a security. Its return is linked in part to an index or other benchmark for a stated term.
A RILA can allow negative market-linked returns. This is a major difference from an FIA crediting strategy with an applicable 0% index-credit floor. RILA terms usually limit both potential gains and potential losses. A buffer may absorb a stated portion of a loss. A floor may set a maximum contract-defined loss for the term. The exact design controls.
RILAs may also be called buffered annuities, structured annuities, or index-linked variable annuities. Those labels do not replace the contract or prospectus. Early withdrawals, adjustments, surrender terms, and securities disclosures need careful review.
Annuity Types Based on When Income Begins
Immediate and deferred answer a timing question. They do not tell you by themselves how value grows or whether market loss is possible.
An immediate annuity often begins payments soon after purchase. A deferred annuity starts income later. It may have a growth period first. Read the growth type and income timing together.
Immediate Annuities
“Immediate” mainly describes when income starts. An immediate annuity is often bought with one lump-sum premium. Payments often begin within one year. A single-premium immediate annuity may be called a SPIA.
Many immediate annuities provide fixed payments. The payment amount can depend on the premium, age, start date, payment option, insurer pricing, and other contract terms. Lifetime and period-certain choices may be available. Availability varies by contract.
Immediate does not identify the funding source or payout choice. The premium may be qualified or nonqualified. The owner must still select from the options the contract offers. A fixed immediate annuity can therefore carry several labels at once.
Once the income choice begins, access to the original premium may be limited or unavailable. The choice can also affect what a beneficiary receives. Those details require an actual quote and contract review. This section only shows where immediate annuities fit in the label system.
Deferred Annuities
“Deferred” means income begins later. The contract may have a growth period before scheduled income starts. Withdrawals or other income choices may be available under its terms.
Fixed, fixed indexed, variable, and RILA contracts can all be deferred. Deferred describes timing, not one growth method. A deferred income annuity, or DIA, also delays income. It is built mainly around a future payment date rather than a general growth value.
Qualified vs. Nonqualified Annuities
Qualified and nonqualified classify the money and its tax setting. They do not describe whether the contract is fixed, indexed, variable, immediate, or deferred.
Qualified annuity
A qualified annuity uses money tied to an eligible tax-qualified retirement account or plan. Examples include IRA or retirement-plan money. Federal tax treatment often follows that account or plan. It already provides tax deferral, so the annuity does not create another layer.
Nonqualified annuity
A nonqualified annuity often uses after-tax personal money. It sits outside a tax-qualified retirement account or plan. The owner’s basis and the contract’s gain can receive different federal tax treatment.
Those are only the tax-label basics. The dedicated guide explains how qualified and nonqualified annuities are taxed.
Annuity Income and Payout Options
Income labels usually describe a payment choice, not the contract’s growth type. A life-only choice may pay for one person’s lifetime. A joint-and-survivor or joint-life choice may continue while either covered person is alive.
A period-certain option sets a minimum payment period. Life with period certain combines lifetime payments with that minimum period. Some contracts offer refund-style choices intended to return a stated amount if the annuitant dies early.
Not every contract offers every choice. Adding survivor, period-certain, or refund protection can change the payment amount. The payout label does not turn a variable, fixed, or indexed contract into a different growth type.
How Annuity Labels Can Overlap
Annuity terminology makes more sense when each label is treated as one layer. The examples below combine growth, timing, and funding labels.
| Example | What each label tells you |
|---|---|
| Deferred fixed annuity | Fixed interest structure; income begins later. |
| Immediate fixed annuity | Fixed income structure; payments begin soon. |
| Nonqualified deferred fixed indexed annuity | After-tax funding; income deferred; index-linked crediting formula. |
| Qualified variable annuity | Retirement-account money; value changes with selected investment options. |
| Nonqualified deferred RILA | After-tax funding; income delayed; contract permits defined index-linked gains and losses. |
Even a detailed label does not show every feature. It will not reveal surrender terms, riders, fees, beneficiary provisions, or the insurer’s financial strength.
Which Annuities Protect Against Direct Market Losses?
Fixed-annuity interest is not directly set by daily stock-market losses. The insurer credits interest under the contract. An FIA uses an index-linked formula. An applicable 0% floor may prevent a negative index credit.
That does not mean every dollar or outcome is guaranteed. Surrender charges, excess withdrawals, market value adjustments, fees, taxes, inflation, and insurer risk can affect value or proceeds. Contract guarantees depend on the issuing insurer’s claims-paying ability.
Variable annuity investment options can lose value with market performance. A RILA can also experience negative market-linked returns within its contract-defined structure. Read “protection” as a specific contract feature, not a promise that loss is impossible.
Which Annuities Can Provide Lifetime Income?
Lifetime income is not limited to one annuity type. It may come through annuitization or an immediate annuity. A deferred income choice or an available income rider may also provide it.
A fixed, indexed, variable, or RILA contract may offer an income path, depending on its terms. The payment amount, start date, access to value, survivor protection, and beneficiary result can differ.
Not every contract offers every method. An optional rider may have a separate benefit base, charge, waiting period, and withdrawal rules. Every insurance guarantee depends on the issuing insurer’s claims-paying ability.
Which Annuities Can Lose Value From Market Performance?
Variable annuities and RILAs can lose value because of market performance. Variable-annuity value changes with selected investment options. RILAs can apply negative index-linked returns under the limits written into the contract.
Fixed-annuity interest is not directly driven by stock-market declines. With many FIAs, a negative index result under an applicable 0% floor produces 0% indexed interest. It does not produce a negative index credit.
Other events can still reduce proceeds or contract value. These include charges, withdrawals, adjustments, rider costs, and insurer failure. Market performance is only one source of risk.
How the Main Annuity Types Compare
The first four rows below are growth types. Immediate and deferred are timing labels. They can combine with the rows above them.
| Type | How value or income works | Market-loss exposure | Typical timing | What to review |
|---|---|---|---|---|
| Fixed | Insurer credits fixed or declared interest under contract terms. | Not directly tied to stock-market declines for fixed interest crediting. | Deferred or immediate. | Rate period, renewal, access, charges, insurer. |
| Fixed indexed | Formula links interest partly to an external index. | Applicable floor may prevent a negative index credit; other reductions remain. | Usually deferred. | Cap, participation, spread, floor, term, access. |
| Variable | Value changes with selected investment options. | Direct investment-market losses are possible. | Usually deferred. | Prospectus, investments, expenses, riders, surrender. |
| RILA | Index-linked return with contract limits on gains and losses. | Defined negative market-linked returns are possible. | Deferred. | Buffer or floor, cap, term, adjustments, prospectus. |
| Immediate | Turns a premium into payments that begin soon. | Depends on the underlying contract and election. | Income now or soon. | Payment option, access, survivor and refund terms. |
| Deferred | Delays income and may allow growth first. | Depends on whether the contract is fixed, indexed, variable, or RILA. | Income later. | Growth type, access period, future income choices. |
Complexity also varies within each type. A basic fixed contract may be easier to review than one with several riders or crediting choices. Compare actual documents, not labels alone. The broader Annuity Pros and Cons guide explains the tradeoffs.
How to Narrow Down the Type That Fits the Goal
Do not begin with a product name. Begin with the job the money must do.
- Goal: Is the priority growth, future income, or income now?
- Risk: How much market loss can the owner accept?
- Protection: Is avoiding direct market loss important?
- Liquidity: How much money must remain available for emergencies or near-term spending?
- Funding: Is the money qualified or nonqualified?
- Income: Is lifetime income needed, and for one life or two?
- Time: How long can the money remain under the contract’s access rules?
- Complexity: Can the owner explain the formula, costs, risks, and guarantees?
- Alternatives: Which bank, investment, retirement-plan, and income choices were compared?
No type is always best. Start with the job the money must do. Then compare the simplest contract or alternative that can do that job. If a personal comparison would help, visit the Annuity and Retirement Income Review.
Authoritative Sources and Further Reading
Primary sources reviewed for this guide include the Investor.gov annuity overview, its guidance on registered index-linked annuities and variable annuities, the FINRA 2025 regulatory oversight report, the IRS page Annuities — A Brief Description, IRS Publication 575, and the NAIC consumer resource Tools for Retirement. These sources were reviewed October 7, 2026. Contract terms and current law control.