If you're looking for a way to create an income stream for your retirement years - or for your family in the event of your death - an annuity might be the investment option you've been searching for.

With a traditional life insurance policy, the insurance company only pays your family if you pass away. But an annuity begins paying you once you reach a certain age and still pays your family if you die at a relatively early age.

An annuity is a type of insurance product that lets you save for the future. It still has the same tax-deferred elements of other long-term savings options, but it is primarily a way to guarantee a paycheck for the rest of your life or for a specific time period.

Unlike IRAs or 401(k) plans, annuities have no annual limit on how much you can contribute in a given year, making them a good supplement to your long-term savings options. The lack of a contribution limit can be useful if you are nearing your retirement age and want to catch up on savings.

One advantage of annuities is that even if you live longer than an insurance company predicts, your annuity contract will still give you payments for as long as you live.

You can determine how you receive your payments and for how long. You'll also decide whether your spouse or beneficiary can receive benefits should you die before the end of your annuity time frame.

Several options to choose from

Different types of annuities offer different benefits, and a Regions Financial Services Provider can help you figure out which is the right one for you. Annuities can be fixed or variable, deferred or immediate, with different combinations for each.

With a deferred annuity, money you contribute is invested for a certain period of time until you elect to take payments from it, usually in retirement. An immediate annuity, on the other hand, allows you to receive payment as soon as possible.

With either of these types, you'll need to decide whether the annuity should be fixed or variable.

A fixed annuity, which can be opened through Regions Investment Services, locks in a specific interest rate for a certain amount of time. At a date you decide, you receive payments from the money you invested into the account for a certain time frame or an open-ended period, such as the rest of your life.

A variable annuity is not tied to a specific interest rate but is instead like a mutual fund, where your earnings will be based on your annuity's investments.

It is generally best to use an annuity for its tax-deferral benefits after your 401(k) and IRA options are fully funded. Both of these options are funded with pre-tax dollars, while annuity contributions are post-tax.

Another option is to open an annuity with a 401(k) rollover. If you leave a job either through a layoff or to pursue other opportunities, it is best not to leave your 401(k) contributions sitting idle, nor is it wise to cash out the money, which can incur penalties and taxes.

Using an annuity rollover, even if your long-term savings is not up to the level you would like it to be, can start you on a good path to help diversify your investments. When you roll over your 401(k) dollars into a variable annuity, this allows you to change your investments to match the current investment climate or your personal long-term savings plans.