An annuity is a when you get a certain amount of money paid to you “for a fixed or contingent period,” often for your entire life “either in prior installment payments or in a single payment.” There are different types of annuities as well as a variety of tax aspects, dependent on what the specific insurance company you choose is offering. In essence, annuities are good for those who will lived longer than they expected as they receive a set of periodic payments until they die. The only disadvantage of an annuity in this situation is that if you don’t exceed your life expectancy you don’t get as much money back from the insurer as you imputed. But living longer often results in more money than you paid in. Non-annuity investment works the other way around. You will not need to pay tax on an annuity until they are paid out.
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