Hybrid annuity

Hybrid annuity

A type of insurance company investment that combines the benefits of both a fixed annuity and a variable annuity.

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hybrid annuity

A single annuity in which a part of an investor's payments purchase units of a variable annuity and the remaining funds purchase units of a fixed annuity.

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Hybrid annuity. With a hybrid annuity, you allocate part of your annuity's assets to providing fixed income payments and part to making variable income payments.

For example, you could buy a hybrid immediate annuity with a lump sum of $50,000, and allocate $35,000 to fixed payments and $15,000 to variable payments.

The fixed portion would lock in a specific yearly income, while income from the variable portion would depend on the performance of the underlying investments you selected.

This approach allows you to combine the advantages of both types of annuities -- regular income from the fixed and growth potential from the variable -- in a single package.