Saving up for retirement doesn’t have to be an intimidating process. Purchasing an annuity can help you in your retirement years so you can still live the life you had while still in the work force. Most owners demonstrate a deep loyalty and commitment to their annuity purchases, with 93% stating they still own their first one. Below are a few answers to some of the basic questions you may have about annuities.

What are annuities? They are an insurance product that, after putting money into it over a certain amount of years, pay out income to the owner. Most people typically buy annuities to help manage their income in retirement, but are also a popular choice for investors.

Are there different types of annuities? There are two basic types: deferred and immediate. A deferred annuity is when you invest money for a period of time and then you begin to make withdrawals, which can be in the form of fixed annuities (a specific amount of money is given to you on specific increments of time). An immediate annuity is when you receive payments soon after making the first investment.

What if you withdraw money early? Before doing so, review your plan’s rules; some insurance companies will charge a hefty price for withdrawing early. If you opt for an annuity lump sum payment (withdrawing the entirety of your annuity) you may also be subject to heavy tax fees. Variable annuities are generally not suitable for short-term monetary goals because substantial taxes and insurances charges may apply for withdrawing early.

What if I don’t want my annuity? If you decide that you no longer want your annuity, there are companies that specialize in buying annuities, such as insurance companies. You may surrender your annuity (a fee may be involved if this is within seven years of purchase) or you can opt to transfer your money to another annuity.

What are the tax benefits? Although you can be heavily taxed for withdrawing your annuity money too early, there are tax benefits. Money that you invest in an annuity grows tax-free. Once you make withdrawals, the amount of money you’ve put into the annuity is also not taxed, though your earnings will be.

For more information regarding whether or not an annuity is for you or if you want to sell your annuity, it is best to consult your insurance company and do plenty of thorough online research regarding benefits and drawbacks of both.