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Term annuity refers to an insurance contract issued and distributed by financial institutions with the intention of paying out invested funds in a fixed income stream in the future. Investors invest in or purchase annuities with monthly premiums or lump-sum payments. The holding institution issues a stream of payments in the future for a specified period of time or for the remainder of the annuitant’s life. Annuities are mainly used for retirement purposes and help individuals address the risk of outliving their savings.
You purchase an annuity by making a payment to an insurance company.
Your annuity can grow over time.
When you're ready to start receiving retirement income, your annuity is turned into a steady stream of income payments.
You want to grow your money while protecting all or some of it from loss.
You want to take advantage of tax-deferred growth.
You want to turn the money you’ve saved into a regular paycheck for a specified number of years or for life.
You’re looking for an efficient way to leave a legacy for your loved ones.
Annuities can be structured according to a wide array of details and factors, such as the duration of time that payments from the annuity can be guaranteed to continue. As mentioned above, annuities can be created so that payments continue so long as either the annuitant or their spouse (if survivorship benefit is elected) is alive. Alternatively, annuities can be structured to pay out funds for a fixed amount of time, such as 20 years, regardless of how long the annuitant lives.