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Insurance 101 – What is an Annuity?

March 22, 2024

An annuity is really just a long-term contract between you and an insurance company. You pay a set amount (either in a lump sum or a series of payments) and the insurance company agrees to pays you back over time, either beginning immediately or at some predetermined point in the future. The repayment can be set for a specific period of time, or for life.

Similar to a 401(k), growth within an annuity is tax-deferred, which is why they’re sometimes used as a retirement or estate planning tool. But unlike a 401(k), you won’t be eligible for a tax deduction based on your contributions to an annuity. With annuities, there’s no one size fits all…they’re only appropriate for specific situations and specific goals. If you have questions or want to check up on your retirement planning, let’s connect.