Annuity

An annuity comes in many forms, but a simple definition is that an annuity is a contract that converts a sum of money into a series of periodic payments for an agreed upon period of time. An annuity can be thought of as a financial vehicle that converts a pool of money into a stream of income. Annuities are most useful in addressing the financial planning needs of people in or approaching retirement. Annuities are unique in the financial world because they can provide protection against the risk or outliving one’s assets (longevity risk) by guaranteeing income payments in perpetuity or any other selected amount of time. Annuities can be viewed as a type of personal pension plan. Social Security is similar to an annuity in that money contributed over the course of one’s working years is converted into a series of periodic payments that provide income during retirement.

Harvard Professor Roland Fryer – The Annuity Puzzle and Why People are More Comfortable Flying if They Can See the Cockpit

The annuity puzzle refers to the fact that few people choose to annuitize even a portion of their...

Owners of Variable Annuities with Living Benefits Protected from Market Storm

Certain living benefit guarantees--particularly guaranteed minimum withdrawal benefits--embedded in variable annuities have provided owners with downside protection during the recent financial market turmoil. A popular variable annuity -- the one with guaranteed “living benefits” -- may be the riskiest product ever sold by the insurance industry. Risky to the health of the insurance carriers, that is. If you bought one of these annuities, you will collect your promised, fixed, minimum income...
Key Phrases: 

What type of risk is associated with annuities?

There are a number of risks associated with annuities, and these risks often depend on the type of annuity (for example whether it is a

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What types of fees should an annuity investor expect to pay?

It depends upon whether it is a

Companies: 

How does one typically purchase annuity products?

Annuity products are created or "manufactured" by insurance companies.  That said, annuities are almost always distributed through intermediaries who are financial advisors of some sort.  In other words, you would purchase an annuity from a licensed

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