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What is an annuity?

Presenter : Braden MacDonald

Category : Basics of Annuities

Topic : What is an annuity?

Length : 4 Mins

Tags : annuities, annuity basics, Safety

About this Video

This video covers the basic features of annuities, how they work, and what benefits they provide.


What is an annuity? | Overview

An annuity is a financial investment product sold through insurance companies and banks. Typically designed to pay out income, though they also offer savings with the advantage of tax deferred growth. Annuities are often used as part of a retirement strategy. Annuities are a popular choice for investors who want to focus on safety of principal and want to receive a steady income stream in retirement.

How an annuity works: After selecting the insurance company and specific product, you make an investment in the annuity by filling out an application. The application is essentially a contact between you and the insurance company which states rate of return and all benefits you will receive in exchange for agreeing to the contract terms. You will then receive payment from the annuity either immediately or on a future date depending on the specific annuity. The income you receive from an annuity can be doled out monthly, quarterly, annually or even in a lump sum payment.

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