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What are annuities? An annuity is just the opposite of life insurance. Life Insurance is the systematic accumulation of an estate that is used for protection against financial loss resulting from premature death. In contrast, annuities are a means of securing a steady cash flow during retirement. The period in which the premiums are paid toward the purchase of an annuity is called the period. The period when the annuity payments are made is called the period. The principal is the premium pald by the Individual buying the annuity (called the ). Interest is earned between the time annuities are accruing tax free but paid for with after-tax dollars. If any portion of the principal and interest has not been returned, it is referred to as the benefit Match the annuity terms on the right with the descriptions of the terms on the left. (Hint: These are not necessarily complete definitions, but there is only one possible answer for each term.) Description Term Starting with regular payments (monthly, quarterly, annually) and as low as $100, this annuity is purchased over an extended period of time This type of annuity pays a set amount of monthly income for a specified number of years for the insured and beneficiaries This type of contract allows cash benefits to be stretched for several years This annuity usually requires a minimum investment (52,500 to $10,000) and is often purchased just before retirement as a way of creating a future stream of income > The amount that is ultimately paid out to the insured varies with the investment results obtained by the insurance company