What type of financial product is sold by an insurance company to provide payments at specified intervals?

An annuity is a financial product sold by insurance companies designed to provide a series of payments at predetermined intervals. This product essentially converts a lump sum of money into regular income, making it especially useful for retirement planning. Individuals often purchase an annuity to ensure a steady income stream, which can help cover living expenses, healthcare costs, or other financial needs over time.

An annuity can be structured in various ways, including fixed or variable payments, and can begin disbursing income immediately or at a future date. Its primary purpose is to mitigate the risk of outliving one’s savings, providing financial security and stability.

In contrast, other options like endowments, life insurance, and term insurance mainly focus on providing financial protection or a payout upon certain events (such as death or the occurrence of a specific term) rather than offering regular payments over time. Understanding this distinction is crucial for making informed decisions about financial products and planning for future financial needs.