An annuity is an investment vehicle that has very polarizing effects on people. Some people can’t say enough good things about annuities, while others are so strongly against annuities that they almost put them in the same category as door- to-door loan sharks. Before you form an opinion either way, make sure you completely understand what annuities are, the different kinds of annuities that are available, and how they can impact your future financial security.
First of all, the term annuity refers to a payment made on an annual basis. So you can notice the inclusion of the Latin root “annu,” which means “yearly.” Note that a yearly annuity payment can be broken up into twelve monthly payments, but the contract obligation is still based on a total annual amount.