The term “annuity” is actually broad and covers a wide range of options. It is most often described as an investment or a kind of insurance that gives the investor a specified amount of annual sums, thus it is called an annuity plan because it provides annual payouts.
An annuity is basically a fixed sum of money paid to an individual or group every year. This sum is usually paid every month for the remainder of the payee’s life but can vary depending on how it was setup.
Investors often choose annuities because they will supplement retirement income easily, helping to boost the steady stream of retirement income so he or she can maintain the lifestyle desired.