General Characteristics of Annuities
Annuities are investment vehicles used to provide steady income to an individual after retirement, often until death. An annuity is a contract between an individual and an insurance company. The individual, called the annuitant, invests money with an insurance company, either as a lump sum or in periodic payments. At some agreed-upon time, the insurance company begins distributing payments to the annuitant out of the account. Payments may begin immediately after an initial investment is made (immediate payment annuity) or at some distant point in the future (deferred payment annuity). Payments may be made in one lump sum or periodically, based on the wishes of the annuitant. A periodic payment deferred annuity may schedule payments on a regular monthly or annual basis, or irregularly, based on the wishes of the annuitant. The size of the payments depends on the amount deposited.
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Types of Annuities |
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Type of Annuity |
How Purchased |
Payout |