Annuity

An annuity is a long-term savings plan offered by an insurance company that provides regular payments in the future. It’s designed to help ensure you have a steady income stream, especially during retirement. You can contribute to an annuity in a lump sum or through periodic payments, and in return, the insurance company distributes payments back to you at a later date—often for a set period or even for life.

Example:
Imagine you invest $100,000 in an annuity today. In return, the insurance company promises to pay you $500 per month starting in 10 years, and these payments continue for as long as you live. This provides financial security, reducing the risk of outliving your savings.

There are different types of annuities, including:

Fixed Annuities: Offer predictable, guaranteed payments.
Variable Annuities: Payments fluctuate based on investment performance.
Indexed Annuities: Payments are linked to the performance of a stock market index, offering potential for growth with some protection against losses.