What are Annuities?

A contract which is made between an insurance company and an investor is called an annuity. Money is given to the company in payments or lump sum by the investor which can grow untaxed. The money can then be returned in a variety of ways to the investor. Brokers often encourage investors to buy annuities as they can earn relatively high commissions from them even when most of the advantages are not earned from annuities. Some brokers are not honest about costs which are associated with annuities like hefty penalties if you withdraw early. The Securities and Exchange Commission regulates the variable annuities but not the fixed annuities as they are not considered securities.