Consumer/Personal Glossary of Terms
What is an Annuity? An annuity is a contract between you and an insurance company that allows your earnings to grow and compound tax-deferred. This is a powerful benefit that you can use to help you accumulate wealth for your retirement or other long-term financial goals. The word "annuity" literally means "annual payments". When you buy an annuity, the insurance company agrees to pay you an income for a specified period of time. Whether these income payments start right away or at some future date, determines what type of annuity you have: either deferred or immediate.