Annuity

A contract that turns a lump sum into a stream of income, often for retirement. Insurance’s answer to “don’t outlive your money.”

An annuity is a contract with an insurer that turns money into a stream of income, often used to create a paycheck that lasts through retirement.

You can fund it with a lump sum or over time (the accumulation phase), and later convert it into income payments (annuitization) that can be guaranteed for a set period or for the rest of your life. Varieties range from fixed (a guaranteed rate) to variable (tied to investments) to indexed (market-linked with a floor and cap).

The core appeal is protection against outliving your money — but annuities vary widely in fees, surrender periods, and complexity, so the fine print really matters.

This is a friendly general explanation, not legal or policy language. Exact coverage depends on your policy, carrier, and state. 🤝

Written and reviewed by the We Insure Things team — licensed independent insurance agents. Last reviewed July 23, 2026. Questions? Ask a licensed agent.