An annuity is a life insurance contract that, at maturity, pays a periodic income benefit for a specific time or the annuitant's lifetime. From the insurer's standpoint, an annuity presents the opposite mortality risk from life insurance.
Life insurance pays a benefit when the insured dies.
Annuity investments grow tax-deferred until income payments begin or the owner makes a withdrawal. Annuity growth is dependent upon the interest rate being paid during the deferred period. Annuity contracts offer a wide variety of premium and benefit payment schedules and investment options. An annuity can be purchased for a single payment or a series of periodic payments. Benefits can be scheduled to begin immediately or deferred until a specific future date.