what is an annuity 
an annuity is an insurance contract issued and distributed by financial institutions and bought by individuals an annuity requires the issuer to pay out a fixed or variable income stream to the purchaser beginning either at once or at some time in the future people invest in or purchase annuities by making monthly premium payments or lump sum payments the holding institution issues a stream of payments for a specified period of time or for the remainder of the annuitant s life annuities are mainly used for retirement income purposes they can help individuals address the risk of outliving their savings 