As an American financial product, an annuity is an insurance contract. An individual makes annuity investment with an insurance company, and the money that may grow tax deferred can be paid back to the owner in several ways. The main feature of an annuity is the option for a guaranteed distribution of income until the death of the person or persons named in the contract.

In the United States, the annuity contracts are defined by the Internal Revenue Code. The Internal Revenue Code dictates the tax treatment of annuities. Annuity contracts are regulated by the individual states. American annuities feature several life insurance and investment products.

Under the U.S. Internal Revenue Code, the growth of the annuity value during the accumulation phase is tax deferred, that is, not subject to current income tax for annuities owned by individuals. The tax deferred status of deferred annuities has led to their common usage in the United States. Under the US tax code, the benefits from annuities do not always have to be taken in the form of a fixed stream of payments (annuitization), and many of the annuities are purchased primarily for the tax benefits rather than to get a fixed stream of income.

The two types of annuity contracts in America include the immediate annuity and the deferred annuity. An immediate annuity guarantees payments for a period of years or the lifetime of an individual or couple, but the deferred annuity helps grow tax deferred until such time as the annuity contract is annuitized (converted into an immediate annuity) or cashed in (either in periodic withdrawals or in a lump sum).

The annuities in U.S. are only allowed to be sold by insurance companies, although private annuity contracts may be arranged between donors to non-profits to reduce taxes. The insurance companies are regulated by the states, so contracts or options that may be available in some states may not be available in others.

There are many insurance companies offering annuities in the United States. Some of the highly popular include Ameriprise Financial, Inc., Fidelity Investments, Pacific Life, Prudential, Charles Schwab, Vanguard, Manulife Financial, and John Hancock Insurance.

For more info on American annuities, click here or call an Annuity Specialist at AnnuityForLife.com, 1-888-261-6237