At its most basic definition, an annuity is an investment sold by insurance companies. Like every investments, annuities are a vehicle in which you put money in and hope to get more money out. There are several different types of annuities but each one has two basic components: payouts and returns.
Payouts are either immediate or deferred. Immediate payouts means you begin paying for the investment immediately, deferred means your payments are delayed until a later date. Returns are either fixed (guaranteed) or variable. A fixed return offers a guaranteed return