Annuities

Annuities are financial products designed to provide a steady income stream, typically used for retirement. They are offered by insurance companies and come in various forms, but all annuities involve a contract between the buyer and the insurer. The buyer makes either a lump-sum payment or a series of payments, and in return, the insurer agrees to make periodic payments to the buyer either immediately (in the case of an immediate annuity) or at a future date (in a deferred annuity). These payments can last for a fixed period or for the lifetime of the annuitant.

There are several types of annuities:

1. Fixed Annuities: Provide regular, guaranteed payments with a fixed interest rate.
2. Variable Annuities: Payments vary based on the performance of underlying investments like mutual funds.
3. Indexed Annuities: Offer returns tied to a specific market index, such as the S&P 500, providing potential for growth with some level of protection against losses.

Annuities are popular as a way to ensure a stable income during retirement, but they can come with fees, and the terms can be complex, making it important for buyers to understand the specifics of the contract.