What is an Annuity?

Answer:

An annuity is a product usually purchased from

an insurance company that allows you to pay a premium in exchange for a way to accumulate funds for retirement and then, if you want it, an income that’s guaranteed. This is the annuitization part of the plan… The funds you have accumulated either by paying flexible premiums gradually over time, or by paying a large single premium, can be transformed to a regularly meted out income for anywhere from 5 years to life. Among the benefits of an annuity is that what you get out of it can exceed what you put in.

There are at least 4 common types of annuities. They are immediate annuities, fixed annuities, variable annuities and equity indexed annuities. Annuities can be excellent tax deferred savings vehicles and a sound way to ensure your wealth is protected for heirs to your legacy.


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