Annuities
An annuity contract involves one or more people and an insurance company. The universal common feature of annuity contracts is the option of the holder or holders to receive assured lifelong income in the form of regular payments from the insurance company.
Retirement saving is a very common motivation for the purchase of an annuity contract. The prospective retiree wants to provide income for the future, minimize the risk of losing wealth and suffering fluctuations of income. Annuities can protect against the risk of outliving one’s retirement saving.
Fixed annuities may have a higher initial interest rate which is guaranteed for a limited time period only. At the end of the guarantee period, the contract may renew at a lower rate.