Annuities are one of the most preferred investment options and offer a tax-free interest income to the investors. However, there are several types of annuities and they each differ in the options they offer along with the returns and the safety. The most risky type of annuity would be the variable annuity. Such annuities are similar to the stock exchange rates and the mutual funds. With such a form of annuities, the investors would receive the payments, based on the performance of their investments.

One of the biggest advantages of such investment option is that it offers a money-market sub group that allows the investors to switch to the secured fixed rare at any given phase. If the investor is less than 60 years of age, he would still receive the tax free benefits, but would not get the payments yet. It has been estimated that the stock exchanges happen to have an annual return that averages above 12%. On the other hand, all the other forms of investments would offer smaller interest rates. It also allows the investors to provide tax-free gifts up to $10000 per year. Obviously, they have a higher liquidity when compared to the fixed annuities. The investor can withdraw up to 105 in the first year, without any specific penalties.

One of the biggest things you need to consider while obtaining annuity quotes is that these do not offer the same security as the fixed annuities and therefore there is a huge amount of risk involved here. Furthermore, there are management fees involved here, just like the ones in the mutual funds.