An annuity is a financial product that pays out a fixed income stream over a period of time. Annuities can be used for retirement income, to supplement other sources of income, or as part of an estate planning strategy.
There are two main types of annuities: fixed and variable. With a fixed annuity, the income stream is guaranteed for the life of the annuity. With a variable annuity, the income stream can fluctuate, depending on the performance of the underlying investment.
Annuities can be purchased from insurance companies and other financial institutions. They are often sold by financial advisors and other salespeople.
Before purchasing an annuity, it is important to understand the fees and commissions that may be associated with the product. It is also important to understand the terms of the annuity contract, including any surrender charges or early withdrawal penalties.