An annuity is a contract between you and an insurance company that requires the insurer to make payments to you, either immediately or in the future. You buy an annuity by making either a single payment or a series of payments. Similarly, your payout may come either as one lump-sum payment or as a series of payments over time.
Fixed Annuity: The insurance company promises you a minimum rate of interest and a fixed amount of periodic payments. Fixed annuities are regulated by state insurance commissioners.
Variable Annuity: The insurance company allows you to direct your annuity premium to different investment options, usually a select list of mutual funds available for that annuity. Your payout will vary depending on how much you put in, the rate of return on your investments, and expenses. These are regulated by the SEC, FINRA, and state insurance commissioners.