When preparing for a spouse or other family members to be taken care of financially upon a person's death, one should invest in life insurance.  When a person gets life insurance, they are creating a contract called an Annuity. An annuity is a guaranteed distribution of money up to the death of the person named on the contract.

For any given Annuity contracts, there is a possibility of two phases.  The deferral phase, wherein money is deposited and accumulated by the customer. The annuity phase, wherein money is received by the customer for a  given period of time.  In all deferral phase contracts, there is an annuity phase.  However a contract can be set up in such a way that it is an annuity phase contract.  Such a contract is referred to as an immediate annuity account.

In an immediate annuity account, a series of payments are paid to an insurance policy over a period of time.  The most common use for an immediate Annuity, is as a pension income.  It is also a tax deferred savings plan.

In a life annuity account, provides income for the annuitant for as long as they live.  This type of Annuity is designed as a loan that pays back what was originally invested with interest to the annuitant.  This type of loan is based on the annuitant's life expectancy and is figured on what the average population life expectancy will be. 

In a life annuity there are variants that can be purchased.  One such variant is a rider that can be purchased for the life of a spouse or friend.  A common Annuity, is one that will continue to pay out to the surviving spouse for as long as they live.  This type of annuity is referred to as a survivorship annuity. Another type of life annuity is referred to as impaired life annuity.  This annuity is designed for annuitants that are smokers or have illnesses that will cause an early death.  All life annuities prices are based upon the life expectancy of the annuitant.  A common life annuity is purchased around the time of retirement.  The payments from such an annuity will not be distributed for twenty years. 

Other types of life annuities can be fixed variable, guaranteed or jointed.  A fixed Annuity is one in which the payment amounts are fixed. Whereas a variable annuity pay amounts in accordance to the investment.  A guaranteed annuity is wherein an annuity issurer is required to make payments over a set amount of years.  If the annuitant should live longer than the preset amount of time, they continue to  receive payments but if they die before the time expires, the payments go to the survivors of the estate.  A joint annuity is an annuity that is set up to pay during the lifetime of one or both annuitants.  Usually this type of annuity is set up for married couples.

Overall there are several types of annuities.  For the most part they are all structured to provide an income to those who are retired and to insure that the survivors of an annuitant has an ongoing income.