What is the annuity definition? An annuity is a life insurance company product. The general annuity definition is given below. An annuity is a life insurance company product that refers to a stream of income payments guaranteed for life.
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More and more Americans are expressing concern over their long-term financial future—especially in terms of being able to enjoy a comfortable retirement. Traditional company-sponsored pension benefits are becoming increasingly rare and Congress talks repeatedly about “fixing” Social Security.
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Before we discuss annuities further, let's answer the question 'what is an annuity?'. The word annuity has puzzled many investors. A large number of people who have annuities don't know how to invest in an annuity and some don't even know what an annuity is. So, what is an annuity?
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When you are choosing a bond to invest in, you would look at the bond's ratings by Standard & Poor's, Moody's, and other ratings agencies' ratings such as A.M. Best. The ratings help you determine how good, stable, and how risky that bond is as well as how secure is your interest payments and return of principal at maturity.
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As with other investments, an annuity has risks that annuity investors should be well aware of. Some people think that since an annuity is half insurance half investment, annuity risks are low and in many cases non-existent. There are plenty of risks associated with annuities.
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