The current value of the annuities are the present value of future payments received from annuities, at a specified interest rate, or rate of return. Higher the rate of return or discount rate on the annuity, the higher the current value of the annuity will be.

Some annuities have fixed-rate and/or premium payments that are paid in the same manner, but others provide a variable-rate of interest, which can vary as per market conditions. Most people prefer to pay in fixed-rate type annuities rather than variable-rate type annuities. These types of annuities have fixed interest rates and payment values. This provides flexibility to individuals for their future financial requirements.

Fixed annuities provide you with an initial investment that allows you to make the initial payment, after which the payments are made. Most fixed annuities also have a retirement age after which the annuitant receives the regular payments. Fixed annuities are usually tax exempt. They usually offer fixed interest rates and are more affordable than other types of annuities. However, fixed-rate annuities usually have a longer life span than variable-rate annuities, which are fixed for a shorter period of time. The tax deferral feature of a fixed annuity allows you to defer income taxes until your payment reaches your retirement age and then convert the deferred interest into regular payments at a specified frequency over the period of the deferred tax deferral. Usually, the longer you defer the tax, the higher the rate of interest on the fixed annuity will be.

Variable-rate annuities also have fixed rates and are less expensive than fixed annuities. However, variable annuities come with a higher interest rate and are not available at any discount. As the rates on variable-rate annuities are always higher than fixed-rate annuities, they are generally more expensive.

Variable annuities come with variable interest rates and can be fixed or variable, depending on the policy holder’s needs. Usually, variable-rate annuities come with a higher initial investment rate. However, variable-rate annuities typically do not have a pension benefit. and thus the retirement benefits. provided by these annuities are usually the same as the fixed-rate annuities.

One of the most popular and preferred types of annuities is the permanent annuities, which offer a fixed annuitant with the possibility to receive a lump sum payment amount upon death of the insured. However, permanent annuities come with a high cost. It is a good choice if you are not looking for immediate cash flow after your death. This is because there are no restrictions or caps on the amount received, unlike the other types of annuities.