A contract between you and an insurance company, under which the insurer agrees to make periodic pay¬ments to you, beginning immediately or at a future date. You purchase an annuity contract by making either a single purchase payment or a series of purchase payments. Annuities are sold by insurance companies, brokers and other financial institutions, usually as a retirement investment. It’s a long-term investment and can have steep surrender charges and penalties for withdrawal before the maturity date. Annuities are not FDIC-insured. Their payments may be set at a fixed interest rate or a variable rate. Annuities have tax deferral benefits, which means the earnings from investments are not taxed until they are withdrawn at a specified age. Source: Securities and Exchange Commission.