Are annuities and insurance the same thing?

Yes, annuities and insurance are two different things. Insurance providers typically sell annuities, but an annuity does not provide financial protection coverage like an insurance policy. Additionally, an annuity does not have a premium. You contribute money into the account and will eventually get that money back.

How do insurance companies pay out annuities?

Insurance companies often offer annuities and construct the annuity to pay out on a predictable schedule. You may purchase an annuity by depositing a lump sum or by funding the contract over time with a series of premium payments. The annuity will pay out over whatever period is specified in the contract.

How do annuities work?

You can set up the annuity with a growth period, where it builds your savings. The return depends on the type of annuity. For example, a fixed annuity pays a guaranteed interest rate. A variable annuity lets you invest your savings in mutual funds. When you’re ready, you can start collecting income payments from the annuity.