Annual income taxation. If annuitized, it can protect from running out of money, but it does not protect against inflation.

Fixed-annuity assets are part of the general fund of the issuing insurer. The general fund invests in conservative instruments. Annuities in their optional distribution - or payout - phase can provide greater income than comparably safe fixed-income products, because the lump sums provided by buyers to purchase their payout streams become part of a pool of money that is divided among survivors when other buyers die. The trade-off for buyers is that they give up access to their lump sums in order to buy their income streams. Income payments remain the same for the life of the annuitant.

Any investor (with fixed-income investments) willing to accept minimally more risks than government or government-insured securities in return for a potentially higher yield. Those planning to generate lifelong income. Those in need of retirement income right away may buy immediate fixed annuities.

Those in lower income-tax brackets who do not need tax deferral. Those with retirement pensions. Elderly people who cannot wait for surrender charges to end.

Withdrawals prior to age 59 1/2 are subject to a federal income tax penalty. The benefits of tax-deferred compounding are greater over longer periods. For those annuitizing, the longer they wait, the greater the periodic payment will be. That is because periodic payments are based one one's life expectancy. Experts advise annuitants to diversify interest-rate risk by making several purchases over several years instead of making a single purchase.

Single of multiple premiums.