---
title: "What is an annuity?"  
description: "What is an annuity?"  
author: "Olga Mikhailova"  
published: 2026-11-12  
updated: 2026-11-12  
canonical: https://answers.mindstick.com/qa/119969/what-is-an-annuity  
category: "finance"  
tags: ["annuity", "pension plan", "retirement income", "guaranteed income"]  
reading_time: 1 minute  

---

# What is an annuity?



## Answers

### Answer by Tahmid Chowdhury

An annuity is a financial product, usually from an insurance company, that pays you a regular income, monthly, quarterly or yearly, in exchange for a lump sum or a series of payments.

It is often used for retirement income, giving guaranteed payments for life or a fixed period. Under NPS, part of the corpus must be used to buy an annuity at retirement.

The advantage is predictable income; the disadvantages include relatively low returns, and annuity income is taxable. Compare options like joint-life annuities and return of purchase price before buying.


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