Are annuities and insurance the same thing?

Yes, annuities and insurance are two different things. Insurance providers typically sell annuities, but an annuity does not provide financial protection coverage like an insurance policy. Additionally, an annuity does not have a premium. You contribute money into the account and will eventually get that money back.

What is a retirement annuity?

Wendy Swanson, Retirement Income Certified Professional™, explains what an annuity is. An annuity is a tax-deferred insurance product designed to provide consumers with guaranteed income for life. The type of annuity you purchase determines how your annuity accumulates value and when your payments begin.

What is an immediate annuity?

An immediate annuity involves an individual making a single premium payment, say $200,000, to an insurance company. They then receive regular payments immediately, for example $5,000 per month, for a fixed time period thereafter. The payout amount for immediate annuities depends on market conditions and interest rates.