What is an annuity?
An annuity is a contract with an insurance company. You pay in money, and in return the company can pay you income later, for a set time or for the rest of your life.
People often use annuities to create steady income in retirement, alongside Social Security.
Types we can talk about
- Fixed annuities: earn a set interest rate for a set period.
- Fixed indexed annuities: earnings are linked to a market index, with protection against losing your principal from market drops.
- Income annuities: turn a lump sum into regular payments, starting now or later.
Things to know
- Surrender charges: most annuities charge a fee if you take out more than a set amount in the early years.
- Long-term product: annuities work best for money you won’t need right away.
- Guarantees: are backed by the insurance company that issues the annuity.
An annuity isn’t right for everyone. We’ll explain the pros and cons in plain English, and you should consider talking with a tax or financial professional about your situation.
Common questions
Is an annuity the same as Medicare?
No. Annuities are a separate product and aren’t connected with Medicare. We only discuss annuities in a separate conversation, if you ask.
Can I lose money in an annuity?
Fixed and fixed indexed annuities protect your principal from market losses, but surrender charges and fees can reduce what you get back if you withdraw early.
Other coverage we can help with
Questions about annuities?
Talk with a licensed agent. It’s free, and there’s no pressure.
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Annuities are insurance products, not investments in the stock market, and are not connected with Medicare or the federal government. They are not deposits, are not FDIC insured, and guarantees are based on the claims-paying ability of the issuing insurance company. Surrender charges may apply. This page is general education, not financial, tax or legal advice.