An annuity is a contract between you and an insurance company. You contribute money (in a lump sum or over time), and the insurer agrees to pay you income — immediately or in the future, sometimes guaranteed for the rest of your life.
Common types
Fixed annuities pay a guaranteed interest rate. Fixed indexed annuities (FIA) credit interest tied to a market index with a 0% floor, protecting principal from market loss. Immediate annuities start income right away in exchange for a lump sum.
Why people use annuities
Annuities address longevity risk — the danger of outliving your money. A fixed indexed annuity in particular pairs principal protection with index-linked growth, complementing an IUL in the SHIELD framework.
Things to weigh
Annuities can carry surrender periods and fees, and terms vary widely by contract. Suitability is essential — the right annuity depends on your timeline, liquidity needs, and goals.
Are annuities safe? +
Fixed and fixed indexed annuities protect principal from market loss and are backed by the issuing insurer's claims-paying ability. Read the contract terms, including surrender periods.
What is a fixed indexed annuity? +
An annuity that credits interest based on a market index up to a cap, with a 0% floor protecting your principal from market declines.
Can an annuity guarantee income for life? +
Yes — many annuities offer a lifetime income option (sometimes via a rider) that pays for as long as you live, addressing longevity risk.