An annuity is a financial contract that provides a series of regular payments to an individual or entity over a specified period of time. A retirement plan typically provides a steady income stream in the future.
Insurance companies usually offer annuities, although other financial institutions can also provide them. They are designed to address the need for income stability and security, especially during retirement when individuals may no longer have a regular paycheck.
When an individual purchases an annuity, they make either a lump sum payment or a series of payments into the contract. In return, the annuity provider agrees to make regular payments to the holder, typically monthly, quarterly, or annual, depending on the contract terms.
There are 4 many different types of annuities.