Annuity

A contract usually sold by life insurance companies that guarantees an income to you or your beneficiary at some time in the future. An annuity is a contract with a life insurance company. When you buy an annuity, you deposit a lump sum of money, and the insurance company agrees to pay you a guaranteed income for a set period of time - or for the rest of your life. Annuities are money commonly used to generate retirement income.