What is an annuity?

An annuity is purchased with a lump sum and pays a regular income for the rest of your life, although shorter “term” annuities are also available. Normally annuities are purchased by pension pots. Annuities can be traced back to the Roman era when “annua” promised a stream of payments for a fixed period of time, or for life, in return for a single premium payment. Modern annuities offer investors a choice of income levels, benefits and how much risk they want to take with their savings.