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An annuity contract is purchased from a life insurance company. The individual gives the insurance company a lump-sum payment or a series of payments. In return, the company will provide a stream of payments to the individual. Although an annuity is purchased from a life insurance company, it serves a different purpose than life insurance. Below is a chart comparing life insurance to annuities.
This 4-page fact sheet was written by Michael S. Gutter and Lisa Leslie, and published by the UF Department of Family, Youth and Community Sciences, March 2014.
References
Courtney, E.A., .Gutter, M.S., and Leslie L.M. (May, 2013). Annuities 101. University of Florida IFAS Extension Webinar Archive. Retrieved from https://student.gototraining.com/878nx/recording/1055357790221802496
Dulisse, R.A. (2012). Annuities Part Two. In Littell, D. A. and McLellan A.C. In 4th Edition. Financial Decisions for Retirement. (pp. 8.1-8.48) Brywn Mawr, PA: American College Press
Dulisse, R.A. (2012). Annuities Part One. In Littell, D. A. and McLellan A.C. In 4th Edition. Financial Decisions for Retirement. ((pp. 9.1 -9.34)) Brywn Mawr, PA: American College Press
Financial Industry Regulatory Authority. (September 13, 2010). Equity - Indexed Annuities - A Complex Choice. Retrieved from http://www.finra.org/investors/protectyourself/investoralerts/annuitiesandinsurance/p010614
Florida Department of Financial Services. (2008). Life Insurance and Annuities. Retrieved from http://www.myfloridacfo.com/Division/Consumers/understandingCoverage/Guides/documents/life_annuities.pdf
Goetting, M.A. (2005). Annuities Montana State University Extension. http://msuextension.org/publications/FamilyFinancialManagement/MT199213HR.pdf
Leimberg, S.R., Baldwin, B.G, Coastes, A. and Kitces, M.E. (2007). Annuities for Income -Overview. 1st Edition. Retirement Income Planning. (pp. 69-80). Cincinnati, Ohio: The National Underwriter Company
U.S. Securities & Exchange Commission. (April 18, 2011). Variable Annuities: What Should You Know. Retrieved from http://www.sec.gov/investor/pubs/varannty.htm