Annuities, offering protection against investment and longevity risk, are available as two basic types: immediate and deferred. Immediate Annuity An immediate annuity converts an initial lump sum of money into a series of monthly, quarterly, or annual payments that begin within a year after purchase. The annuity owner can elect to receive payments over a specified number of years or as steady income for life. Deferred Annuity A deferred annuity allows savings (whether lump sum or periodic contributions) to accumulate, tax deferred, until the annuity owner chooses to receive income. The annuity owner decides how the money accumulates--based on a fixed interest rate, an indexed rate, or the performance of stocks and bonds. The owner also selects how he or she will receive income--in a lump sum, as payments for a specified number of years, or as regular payments for life. Many deferred annuities allow you to withdraw money during the accumulation phase, either as periodic or systematic withdrawals. These withdrawals are referred to as guaranteed lifetime withdrawal benefits. Often there is a limit on the amount that may be withdrawn each year.