Annuities have become increasingly popular in recent years. While due to many reasons, two big ones are that annuities pay guaranteed income and provide tax-advantaged growth for your money.

The biggest advantage of their guaranteed payouts? Your income stream doesn't change with political or economic conditions, such as a recession.

The technical definition of an economic recession is two successive quarters of negative economic growth. The National Bureau of Economic Research (NBER) is the body that determines when the U.S. economy is going through a recessionary period.

According to research by NBER and graph data from the Federal Reserve Bank of St. Louis, the United States has been through 17 recessions since 1920.

Annuities come in all sorts of flavors, but the two primary flavors are fixed annuities and variable annuities. One type of fixed annuity, the fixed index annuity, is so popular with retirees and working-age retirement savers, it’s also worth a mention.

The biggest risk with annuities in a recession is risk of loss– or how much the money you have parked in the annuity loses value due to market conditions. Depending on the type of annuity you hold, your money might be at greater risk for loss based on how the market behaves.

Let’s go into more depth about these annuity types and how a recession affects them differently.

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How is an annuity priced? And why should it matter to you? While you may be exploring an annuity for your retirement, many Americans count on fixed annuity contracts as a safeguard against today’s economic uncertainty.

In many ways, retirees and retirement savers have had a rough go in this ever-changing economic climate. Retired Americans have sought to find choices that pay sufficient regular income for their monthly household needs. Risk-averse savers also have been hit particularly hard, as interest rates still remain near historic lows.

Millions of people have found peace of mind by receiving a lifetime income stream from an annuity contract. This type of payout will guarantee someone a fixed sum of money on a regular basis for as long as he or she lives.

But how can you, the annuitant on the contract, know if you are getting a good deal on the annuity (a fair annuity price) when you buy one for your portfolio? There are several factors that enter into how a life insurance company will price its annuity payouts.

To help you receive the best “bang for your buck,” it’s good to understand how these factors can affect the pricing of annuities by insurance companies -- and the impact on the annuity payout you will receive.

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