Most people use annuities as supplemental investments in combination with other investments such as IRAs, 401(k)s, or other pension plans. Earnings in annuities grow and compound, tax-deferred, which means that the payment of taxes is reserved for a future time. Insurance companies that offer annuities pay a specific amount over a predetermined period of time either as an immediate annuity (beginning immediately) or as a deferred annuity (after an accumulation phase). The owner controls incidents of ownership in the annuity, has the right to the cash surrender value, and can also assign the policy and make withdrawals. The investor, or annuity owner, is usually the policyholder and is often also the annuitant (the beneficiary (or beneficiaries) of the annuity whose life expectancy and age are used to determine the terms of the annuity). In many cases, this sum is paid annually over the duration of the investor's life. In the U.S., an annuity is a contract for a fixed sum of money usually paid by an insurance company to an investor in a stream of cash flows over a period of time, typically as a means of saving for retirement. Related Annuity Payout Calculator | Retirement Calculator
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