What is an annuity?
An annuity is a contract where an insurance company, in exchange for an lump sum deposit, agrees to pay you an income for period of time.
The payout could be for a set time (i.e. 10 or 20 years), an indefinite time (i.e. lifetime) or a hybrid (lifetime with a guaranteed minimum number of years).
The lifetime payout option is a common choice for seniors who are concerned that they will run out of money before they die.
Annuities are divided into two types:
Immediate annuities, where the payout begins right away, and
Deferred Annuities where the payout is put off to a future time.