What Is An Income Annuity?
An income annuity is a type of insurance policy that provides you with a guaranteed income stream for life or for a specified period of time. When you purchase an income annuity, you give an insurance company a lump-sum payment, and in return, they agree to pay you a fixed income for the rest of your life.
There are two main types of income annuities:
- Life annuities: Life annuities provide you with a guaranteed income for the rest of your life.
- Periodic annuities: Periodic annuities provide you with a guaranteed income for a specified period of time, such as 10 or 20 years.
Income annuities can be a good option for people who are looking for a guaranteed source of income in retirement. They can also be a good option for people who want to protect their assets from inflation and market risk.
However, it is important to note that income annuities do have some drawbacks. First, they can be expensive. Second, you will not have access to your money once you purchase an income annuity. Third, if you die early, your beneficiaries may not receive any money from the annuity.
If you are considering purchasing an income annuity, it is important to talk to a financial advisor to get personalized advice.