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Finance

What is An annuity?

An annuity is a financial product that pays you a steady stream of income, often for life, usually in retirement. You pay in a lump sum or over time, and in return the provider guarantees regular payments — trading savings for predictable income.

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Key things to understand

  • 1It provides a steady, often lifelong, income stream.
  • 2You fund it with a lump sum or regular payments.
  • 3It's commonly used for retirement income.
  • 4It trades a pot of savings for predictable payouts.

Frequently asked questions

What is an annuity?
A financial product that turns savings into a guaranteed stream of regular income, often for life.
How does an annuity work?
You pay a lump sum or installments to a provider, who then pays you regular income, typically in retirement.
What's the downside of an annuity?
Income can be lower than other investments, and money paid in is often locked away or hard to access.

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