What is an Annuity? – Annuity Life Insurance Policy

Annuities are a type of financial product that provides a steady income stream over time. Insurance companies usually sell them, and individuals can buy them to add to their retirement income. An annuity Life Insurance policy provides a steady source of income during retirement or use as an investment vehicle. Individuals consider annuities low-risk investments because insurance companies back them and guarantee the payment. Annuities come in two main types: fixed and variable. Fixed annuities: provide a guaranteed rate of return. However, variable annuities offer the potential for higher returns but come with more risk. Individuals structure annuities as immediate. Immediate annuities begin paying out right away, while deferred annuities allow the investor to defer payments until later.