What are they?
An annuity is like a mortgage payment that works in reverse. In exchange for your investment, a life insurance company makes regular payments to you that include both interest and principal. But unlike a mortgage that normally ends after a specific period, the income payments can be guaranteed for the rest of your life.
Who provides them?
Life Insurance Companies.
An annuity offers a guaranteed income for life or for a chosen period of time. It provides a pre-determined monthly or annual income without any periodic investment decisions required. For non-registered funds, the purchase of a prescribed annuity can provide significant income tax advantages.
When long term interest rates are at or near historical low levels, an increase in the rate of inflation can cause the purchaser of an annuity to lose some of his or her purchasing power.
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