Series 7: Chapter Eight

Chapter Eight

Annuities

Annuities are investment vehicles used to provide steady income to an individual after retirement, often until death. An annuity is a contract between an individual and an insurance company. The individual, called the annuitant, invests money with the insurance company, either as a lump sum or in periodic payments. At some agreed upon time, the insurance company begins distributing payments to the annuitant. Payments may be made monthly, in a lump sum, or irregularly, based on the wishes of the annuitant. The size of the payments depends on the amount deposited.

Only insurance companies can issue annuities. However, annuities can be marketed by various sorts of investment-rela