Resource Directory Results

Annuities

An annuity is a series of income payments made to you at regular intervals in return for premiums you have paid. The most common use of income payments from an annuity is for retirement.

Income payments are generated through a contract with a life insurance company. These payments are funded by principal (the premiums you pay) and earnings (which accumulate on the invested principal).

An annuity has some advantages over other types of investment products.

• Earnings on accumulated funds are tax-deferred.
• The contract guarantees an income you can receive for life.
• You can often choose a lump sum payment instead of periodic payments.
• Your contract may allow you to borrow from the annuity.

An Annuity is not Life Insurance
Annuity contracts are usually sold by life insurance companies, but annuities are not life insurance. They do not provide life insurance protection.

The big difference:

• Life insurance protects against dying too soon.
• An annuity protects against living too long.

Life insurance provides benefits to your family if you die. An annuity helps you accumulate money for future income needs. Don`t buy an annuity as a savings account or for any short-term purpose. The most common use for income payments from an annuity contract is to fund retirement.