What is an Annuity?

What you should know about them. Individuals hold about $2.2 trillion in annuity contracts; a tidy sum considering an estimated $9.2 trillion is held in all types of IRAs.1 Annuity contracts are purchased from an insurance company. In exchange, the insurance company makes regular payments to the buyer — either immediately or at some future date. These payments can be made monthly, quarterly, annually, or as a single lump sum. Annuity contract holders can opt to receive payments for the rest of their lives or a set number of years. The money invested in an annuity grows, tax deferred. When the money is withdrawn, the amount contributed to the annuity will not be taxed, but earnings will be ta

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