The goal of an annuity plan is for you to be able to comfortably meet your financial goals post-retirement. It is essentially a pension plan that helps you plan for a regular income for the rest of your life. In short, your money is invested, and you live on the returns generated from the investment. These investments are not designed for a risky “high investment return.”
Conventional annuity contracts provide a predictable, guaranteed stream of future income (e.g., for retirement) until the death(s) of the beneficiaries(s) named in the contract or, until a future termination date – whichever occurs first. These financial instruments have been used to accumulate funds and provide significant and sudden increases in personal income (via future, lump-sum withdrawals), all while legally avoiding the taxes (e.g., income-, capital gains-, estate-) that would otherwise be assessed on them. They are designed to make you comfortable post-retirement. Annuities are separated into two categories: Deferred and Immediate Annuities.