What is an Annuity?
An annuity is an insurance contract designed to provide an individual with income for an established period of time, often beginning at retirement age. Payments are generally made on a monthly basis and may continue for as long as you live or for a stated period of time. Payments may begin immediately or be deferred until some future date. Most annuities are long term contracts and generally should not be considered or purchased for short-term purposes. Annuities may be appealing and useful in a variety of situations. The following are some examples:
- Companies funding their employees’ pension plans;
- Individuals who are not covered under traditional pension plans or who desire to supplement their future incomes;
- Individuals who have sold a business;
- Individuals who have sold a home;
- A widow, widower or divorcee who needs to convert a lump sum cash settlement into income, but wants safety and security in terms of future payments and guarantees;
- Grandparents who want to provide for their grandchildren; or
- Someone who desires to set aside or accumulate funds for future needs.
If you have questions, the Consumer Services Division of the Department of Insurance is here to help.
North Carolina Department of Insurance
325 N. Salisbury Street
Raleigh, NC 27603