What Exactly Are Annuities? 
What are annuities ? Well as simply as possible , Annuities are investment products offered through insurance companies . There are different kinds of annuities , some for building balances and others for spending balances of money . The building balances form of annuity is invested and grows tax deferred over time . This is known as the accumulation phase . Depending on your choice of accumulation annuity you can have little risk to significant risk on return . Reducing your investment risk usually also means reducing your investment return . Accumulation annuities can offer a larger range of risk and return options along with tax deferral . When you decide to spend or distribute savings through an annuity , it is called an immediate annuity and begins a systematic series of regular payouts over your lifetime . An immediate annuity is know as a product that you `` ca n't outlive '' as it will pay you as long as you live . And , depending on the payout you choose , can guarantee that if you pass early , the payouts will continue to a beneficiary of your choosing for a set number of years or until all of your contributed funds are spent . An immediate annuity now offers a variety of payout options and really should be considered as part of a retirement portfolio . They provide a constant steady stream of income that will last as long as you do and if you choose an option will keep pace with inflation over time . 