The next time you're ready to roll over a certificate of deposit, your bank might make you another offer:

"How about a deferred annuity?" the salesperson might ask. "It's just like a CD except that it's tax deferred." What's more, the annuity might be paying a quarter-point to as much as a half-point more interest than you'd get from a new CD.

But an annuity is not "just like" a certificate of deposit. It was not created by the bank or savings and loan, as some customers seem to believe. It is backed by an insurance company, not by federal deposit insurance.

It offers you some tax advantages. But you're locking your money into what is practically a lifetime investment.

In short, you don't date an annuity. You marry it. So you better know what you're doing.

Traditionally, tax-deferred annuities have been sold by insurance agents. Then financial planners and stockbrokers got into the act. Now, court decisions and deregulation are throwing open the doors to banks. Last year, at least $7 billion to $8 billion worth of annuities were sold by banks, says Timothy Pfeifer, consulting actuary at Tillinghast, a Towers Perrin Co. firm in Chicago. This year, that might double.

With these annuities, an insurance company declares an interest rate that is "fixed" for a specified period of time (as opposed to a "variable" annuity, whose yield changes along with its investments). When that time is up, the insurer declares a new interest rate. The earnings build up tax deferred. No tax is due until you take the money out.

With a flexible annuity, you make regular contributions -- for example, $100 a month. With a single-premium annuity, you put up a single lump sum. Minimum payment is usually anywhere from $2,000 to $10,000.

You generally earn a bit more interest on single-premium annuities. At present, they're in the 9 percent area, compared with 8.5 percent on flexible annuities. (Top-paying companies may offer 0.5 percent more, but you might be cut at renewal time.)

Savers love the tax deferral that annuities offer. But they don't always realize the high cost of withdrawing their funds.

Any time you take tax-deferred earnings out of an annuity, you will owe income taxes on the money. The IRS levies an additional 10 percent penalty when you're younger than age 59 1/2. So tax-deferred annuities are not a short-term savings vehicle for the young.

Furthermore, the insurance company may levy its own penalties if you take the money out too soon. You might have to pay 6 percent if you quit the investment in the first year, 5 percent in the second year, and so on. Not until you reach the seventh year could you tap your money penalty free. That's an issue for retirees who might need income from their funds. Only part of your money should be tied up in a annuity.

Some insurers' early withdrawal penalties last for 10 or 15 years -- a deal to avoid. By contrast, others tie you up for as few as one or three years at a time. Still other annuities have "bailout" rates. You get a one-time chance to leave without paying the insurer's surrender charge if your renewal rate drops, say, 1 percentage point below the rate you started with.

For a list of the insurance companies paying some of the most competitive annuity rates, get a copy of Annuity Shopper, $10 from United States Annuities, 98 Hoffman Rd., Englishtown, N.J., 07726.

Longer-term annuities don't lock you up entirely. You can usually withdraw up to 10 percent of your money a year without paying a surrender charge. But you'll still owe income taxes and maybe penalties to the IRS.

The only way to quit an annuity and avoid taxes is to roll your funds into another annuity, using a tax-free exchange. You can see why I said that this amounts to a permanent investment. Choose it only if you don't expect to need this money for 10 to 15 years or more.