Annuities: What Are They and How Do They Work?

Annuities

Annuities are financial products that provide a steady income stream, typically for retirees. In exchange for an initial investment, an insurance company makes periodic payments to the annuitant, either immediately or at a future date. There are different types of annuities, including fixed, variable, and indexed, each with varying growth potential and risk.

Key FAQs

  • What are the benefits of an annuity?
    • “Annuities provide guaranteed income, tax-deferred growth, and can be customized for lifetime payments.”
  • How does an annuity work in retirement?

“An annuity provides a stream of income in retirement, offering either fixed or variable payments based on the terms of the contract.”

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