What an Annuity Is and Why It Exists

This lesson defines an annuity in plain language: a contract with an insurance company designed to turn money into future income, tax-deferred growth, or both. It explains why annuities exist, what problem they are meant to solve, and how they differ from ordinary investment accounts.

The focus is foundational. Students will learn the basic parties in an annuity contract, the difference between accumulation and income phases, and the central tradeoff: annuities can reduce certain retirement risks, but they do so through contract rules, insurer promises, fees, and reduced flexibility.