An annuity is an insurance contract that offers a variety of pay out options based on the premium paid into the contract. Uniquely, annuities are the only financial vehicle that can offer a guaranteed income stream for life.  Fixed annuities offer tax deferred growth and protection from market volatility while providing guaranteed growth. 

Annuities are used for various reasons:

  1. To transfer an asset into an income stream for life or for a certain period of time. This is called immediate annuity.  It is often used in estate or Medicaid planning.
  2. To guarantee downside protection (never lose principal or earned interest) with guaranteed rates and equity indexed growth. This is called deferred or deferred index annuities.
  3. To offer income streams for life programs.  Regular annuities work well for retirement planning.
  4. Many deferred annuities offer income riders with guarantees for retirement income.