Annuities are insurance contracts intended to provide a fixed stream of payments to an individual. Some annuities can provide a guarantee income that can last for as long as you live or even longer. Annuities transfer risk from the owner (annuitant) to the insurance company. The annuitant (you) pay the annuity company premiums to bear that risk. Premiums can be a single lump sum or a series of payments depending on the annuity type.
Payout
At some point you stop paying the annuity and the annuity starts paying you which is called the payout phase. Annuities are customizable payments that can be monthly, quarterly, annual, or even a lump sum. Annuities may have early withdrawal penalties if you withdraw the money early called surrender charges. Annuities aren’t for everyone individuals not worried about running out of income may not need an annuity.