The variety of annuity types gives you the flexibility you may require to plan for your future income needs. Get to know the features of different annuities before you make your investment decisions. Here are some basic annuity types:

Tax-deferred annuities have two stages: accumulation and payout. Income taxes on the growth in value of your annuity are deferred until you withdraw money. Income taxes must be paid at withdrawal. Keep in mind that a 10% federal tax penalty may apply if you withdraw money before you turn age 59½.

Fixed annuities generally pay a set, unvarying amount of interest. During the accumulation period, your money earns interest rates set by the insurance company. The company guarantees a minimum rate of interest. This guarantee is backed by the company's claims-paying ability.

When you retire, you must decide whether to "annuitize" all or only a portion of your account balance and how often you want to receive payments. Keep in mind that annuitization is generally an irrevocable decision. Annuities offer many payout options, and some provide income for as long as you live.

Variable annuities offer the potential for greater investment growth than a fixed annuity. While the payment amount can vary, depending on the performance of the underlying investment, your income stream is more likely to stay ahead of inflation.

In a variable annuity, you make payments to the insurance company during the accumulation period. The company places those payments or deposits (less any applicable charges) into what's call a Separate Account. You choose from various investment options.

Variable contracts are securities registered with the Securities and Exchange Commission. Variable option values (stock funds, bond funds, will fluctuate so that your investment units, when redeemed, may be worth more or less than their original value. You have the opportunity to get higher returns, but with that comes higher risk.

Single-premium and multiple annuities allow you flexibility of another kind. You can purchase a single-premium annuity by making one payment to the insurance company. Or you can purchase a multiple-premium annuity in one of two ways. Scheduled premiums are paid according to a contract that spells out the amount of your payments and when you pay them. A flexible-premium annuity is paid in amounts and a time frame decided by the contract holder — within set limits.

Immediate annuities can be fixed or variable. Generally, you purchase an immediate annuity with one payment. Income payments start right away — usually beginning 30 days and no later than 12 months after you make your initial contribution. An immediate annuity can provide income payments for the rest of your life depending on the payout option you choose.