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As a group of financial services, annuities are contracts that are issued and distributed with the intention of providing investments with a fixed income stream in the future. An annuity is a contract in which investors invest or purchase a stream of payments in the future for a period of time or for the remainder of the annuitant's life. Individuals use annuities primarily for retirement purposes and to reduce the risk of outliving their savings.

A guaranteed income stream is provided by an annuity, usually for retirees.

Annuities are funded with either a lump-sum payment or periodic payments, which is known as the accumulation phase.

A fixed period of time or for the rest of the life of the annuitant follows the annuitization period.

Investors have the option of structuring annuities into a variety of different instruments, giving them flexibility.

Annuities are divided into immediate and deferred annuities and can be fixed or variable in nature.