In its most general sense, an annuity is an agreement for one person or organization to pay another a stream or series of payments. Usually, the term “annuity” relates to a contract between you and a life insurance company, but a charity or a trust can take the place of the insurance company.
There are many categories of annuities. They can be classified by:
An annuity can be classified in several of these categories at once. For example, you might buy a nonqualified single premium deferred variable annuity.