An annuity contract primarily provides:

An annuity contract primarily provides income for life, which is one of its key functions. An annuity is designed to help individuals manage their income during retirement by converting a lump sum of money into a steady stream of payments, often for the duration of the individual’s life. This feature addresses the risk of outliving one’s financial resources, commonly referred to as longevity risk, and ensures that retirees have consistent income to cover living expenses over time.

Annuities can also provide tax-deferred growth on the invested funds, further enhancing their attractiveness as a long-term financial product. The focus on providing lifelong income is a fundamental aspect of why people invest in annuity contracts, differentiating it from other financial products or savings plans that may serve different functions, such as immediate cash payments, lump-sum benefits, or short-term savings.